The UK construction sector continued its downturn in August 2025, with industry activity falling for the eighth consecutive month, driven by sharp reductions in key sectors but an increase in some non-residential projects.
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The latest S&P Global UK Construction PMI reported an index of 45.5, a slight improvement from July’s five-year low of 44.3, but still below the neutral 50 mark, indicating a decline in output.
Housing saw its steepest decline since February, with an index of 44.2, while civil engineering contracted sharply, recording its lowest level since October 2020 at just 38.1.
Commercial construction showed some resilience, with a smaller decline in activity, registering 47.8.
“Construction activity has decreased throughout the year to date, the longest continuous downturn since early 2020,” said Tim Moore, economics director at S&P Global.
“August data signalled only a partial easing in the speed of decline.”
Supply-side conditions showed signs of improvement in August, with delivery times shortening and purchasing price inflation easing to a ten-month low.
Business confidence remained steady, with 34 per cent of firms expecting growth ahead, buoyed by optimism around infrastructure work.
Jordan Smith, regional director at Thomas & Adamson, a construction and property consultancy, noted that the Bank of England’s interest rate cut to four per cent in August could improve project viability and encourage movement in the market by making financing more attractive.
Office of National Statistics (ONS) data confirmed housing completions fell by 21.1 per cent in the first quarter of the year compared to the previous quarter, though new housing starts rose by 11.3 per cent.
BCIS chief economist, Dr David Crosthwaite highlighted that while housing starts were up, the drop in housing completions signalled ongoing challenges in meeting government targets.
The Glenigan Index, which tracks construction starts under £100 million, however, showed a 18 per cent decline in housing starts for the three months to the end of August, compared to the previous three months.
While it reported a 13 per cent rise in non-residential projects, with office construction seeing a massive 103 per cent increase.
Glenigan’s data for civil engineering in August contrasts with that of S&P, showing a two per cent increase in the month, but a 22 per cent year-on-year decline, highlighting a sharp divergence between short-term growth in certain civil sectors and the broader downturn in infrastructure.
Despite overall setbacks, Kelly Boorman, national head of construction at RSM UK, pointed to stronger pipelines and rising mobilisation in both commercial and civil sectors as a positive sign for the industry.
Glenigan economist, Drilon Baca added: “The sector is still in a far stronger position than it was during last winter, holding relatively steady overall when compared like-for-like against last year’s figures.”
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