UK construction output falls at slowest pace in three months

Investing.com -- UK construction output continued to decline in September, but at the slowest rate in three months, according to the latest S&P Global UK Construction Purchasing Managers’ Index (PMI) on Monday.

The headline PMI rose to 46.2 in September from 45.5 in August, marking its highest level since June. Despite the improvement, the index remained below the neutral 50.0 threshold for the ninth consecutive month, indicating an ongoing contraction in the sector.

Residential building work showed signs of improvement with an index reading of 46.8, while civil engineering remained the weakest-performing segment at 42.9, though both areas declined at a softer pace than in August. Commercial construction was the only sub-sector to register a faster rate of decline, posting a reading of 46.4.

New orders continued to decrease for the ninth straight month, but the reduction was only marginal and the slowest over this period. Construction companies cited subdued demand, elevated business uncertainty, and client hesitancy as factors making it difficult to convert sales opportunities. Some firms reported new business wins related to energy projects.

Employment in the construction sector fell for the ninth consecutive month as companies maintained hiring freezes and did not replace departing staff due to reduced workloads, though some reported increased recruitment of apprentices.

Supply conditions improved modestly in September, with shorter delivery times for purchased items linked to reduced pressure on vendor capacity. Input buying declined for the tenth straight month.

Cost pressures remained significant, with a strong increase in purchasing prices recorded during September. While inflation accelerated compared to August, it remained softer than the average seen in the first half of 2025. Companies attributed rising input prices to elevated pay pressures and increased energy, raw material, and transport costs.

Business confidence remained subdued, with expectations broadly unchanged from August’s 32-month low. Some construction firms expressed hopes for a boost from infrastructure spending, energy sector demand, lower interest rates, and planning approvals, but these positive factors were offset by concerns about the UK economic outlook, capital expenditure cutbacks, and client uncertainty ahead of the Autumn Budget.