Fastest downturn in UK construction output since May 2020
Steep declines in housing and civil engineering activity; New work falls at fastest pace for almost five years
FEBRUARY PMI data highlighted another fall in UK construction output, with the speed of decline accelerating considerably since the start of 2025. At 44.6 in February, down from 48.1 in January, the headline S&P Global UK Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index tracking changes in total industry activity – registered below the neutral 50.0 threshold for the second month running. The latest reading was also the lowest for nearly five years and signalled a steep decline in total construction activity.
Residential building (index at 39.3) decreased for the fifth month in a row and was the weakest-performing area of construction activity in February. Aside from the pandemic, the rate of decline was the fastest since early 2009. Survey respondents often cited weak demand conditions, headwinds from elevated borrowing costs, and a lack of new work to replace completed projects.
Civil engineering activity (39.5) also registered a steep decline in February. The respective seasonally adjusted index was the lowest since October 2020. Commercial construction (49.0) displayed a degree of resilience, with output levels falling only marginally and at a similar pace to that seen in the previous survey period.
Business activity expectations meanwhile remained positive overall in February, despite a steep decline in order books and concerns about a lack of new tender opportunities. Around 39% of survey respondents forecast an upturn in output during the year ahead, compared with 17% that forecast a decline. Nevertheless, the resulting index signalled a much lower degree of optimism than seen on average in 2024.
Tim Moore, economics director at S&P Global Market Intelligence, said: ‘Sharply declining order books rippled through the UK construction sector in February, which led to accelerated reductions in output volumes, employment, and input buying. Weak demand conditions were attributed to entrenched caution among clients, against a backdrop of subdued consumer confidence and lacklustre economic performance.
‘Aside from the pandemic, total industry activity decreased at the steepest pace since December 2019. This was led by considerable reductions in residential building and civil engineering work, whilst a degree of resilience was reported for commercial construction activity. Survey respondents widely cited a lack of new work in the house-building segment, due to soft market conditions and the impact of elevated borrowing costs.’
Mr Moore added: ‘Construction companies remain optimistic overall about their growth prospects for the next 12 months, albeit less so than on average in 2024 amid increasing concerns about the broader UK economic outlook.’
