UK construction activity stabilises in July amid slower declines

What's happened

UK construction activity has stabilised in July after a sharper downturn earlier in 2026. The S&P Global PMI shows the sector at 44.7 in July, up from 38.4 in June, with housebuilding leading a slower pace of decline. Employment fell for the 19th straight month, while input costs eased from May’s high. Confidence for the year ahead has improved.

What's behind the headline?

• The July PMI reading of 44.7 indicates a slower contraction pace than June but remains in negative territory, suggesting a fragile rebound rather than a full recovery.
• Housebuilding shows the strongest improvement among sub-sectors, hinting at possible shifts in project pipelines as developers seek to capitalise on niche opportunities.
• Employment remains weak (19th consecutive monthly drop), underscoring persistent cost pressures and cautious hiring by firms.
• The easing of input costs signals some relief from supplier price pressures, which could feed through to activity if demand stabilises.
• The composite PMI turning above 50 in services and manufacturing lifts overall sentiment, though construction remains the least buoyant part of the economy.

How we got here

The sector has faced a prolonged slump since January 2025, driven by global uncertainty and weaker demand. July signs point to a stabilising trend, supported by revivals in tender opportunities and transport/infrastructure projects, despite ongoing geopolitical tensions.

Our analysis

Independent reports a stabilising construction sector with tentative improvement in demand and tender opportunities. Reuters corroborates the July PMI rise and notes ongoing employment weakness and cost pressures. Both highlight geopolitical uncertainty weighing on demand but show pockets of activity in housebuilding and infrastructure.

Go deeper

• What does the July PMI reading imply for new construction projects in the second half of 2026?
• Are there regional variances in the recovery within the UK?
• What are firms saying about tender opportunities and costs going forward?

More on these topics

• Iran (Islamic Republic of Iran) - Country in the Middle East

  Iran, also called Persia, and officially the Islamic Republic of Iran, is a country in Western Asia. It is bordered to the northwest by Armenia and Azerbaijan, to the north by the Caspian Sea, to the northeast by Turkmenistan, to the east by Afghanistan a

• Reuters - News organization company

  Reuters is an international news organization owned by Thomson Reuters. It employs some 2,500 journalists and 600 photojournalists in about 200 locations worldwide. The agency was established in London in 1851 by the German-born Paul Reuter.

• United States - Country in North America

  The United States of America, commonly known as the United States or America, is a country mostly located in central North America, between Canada and Mexico.

• United Kingdom - Country in Europe

  The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the north­western coast of the European mainland.