What's happened
UK construction activity contracted for the fourth consecutive month in April, with the S&P Global purchasing managers' index (PMI) registering 46.6. Political uncertainty and rising costs have hindered new projects, although some recovery in housebuilding is noted. The outlook remains cautious as firms await clarity on government spending plans.
What's behind the headline?
Current Trends
- The construction PMI at 46.6 indicates ongoing contraction, though the rate of decline has slowed.
- Residential building shows signs of resilience, with a 22% quarterly increase in private housing construction.
Factors Influencing the Sector
- Political uncertainty, particularly regarding government spending reviews, has led to hesitancy among clients.
- Rising costs for raw materials and labor are impacting profitability and decision-making.
Future Outlook
- Industry experts anticipate a potential turnaround, especially in residential projects, contingent on clearer government policies.
- The upcoming spending review on June 11 is seen as a critical moment for establishing a roadmap for public-private partnerships.
What the papers say
According to The Guardian, the construction sector's PMI rose slightly to 46.6, indicating a continued decline but at a slower pace. Tim Moore from S&P Global noted that 'heightened business uncertainty' has weighed on client demand. Meanwhile, The Independent highlighted that the civil engineering sector is particularly struggling, with a PMI of 43.1 due to a lack of new work. Bloomberg echoed these sentiments, stating that uncertainty has led to delayed decision-making and cutbacks in staffing. The overall sentiment across sources reflects a cautious outlook, with some optimism for recovery in housebuilding as noted by Glenigan's data on residential projects.
How we got here
The UK construction sector has struggled since early 2025, with expectations for recovery following Labour's election victory in July 2024 not materializing. Political uncertainty and rising costs have dampened client demand and delayed project decisions.
Go deeper
- What factors are contributing to the decline in construction?
- How might the upcoming spending review impact the sector?
- Are there any signs of recovery in housebuilding?
Common question
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What is Causing the Decline in the UK Construction Sector?
The UK construction sector is facing significant challenges, leading to a continued decline in activity. Understanding the factors behind this downturn can help stakeholders navigate the complexities of the industry. Below are some common questions regarding the current state of the UK construction sector.
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What are the main challenges facing the UK construction sector in 2025?
The UK construction sector is currently grappling with significant challenges that are impacting its growth and stability. With a decline in activity for several months, many are left wondering what factors are at play and how companies are responding to these hurdles. Below, we explore the key questions surrounding the current state of the construction industry in the UK.
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