S&P Global UK Construction PMI®: Weaker Housing Activity Weighs on Sector in October

Key Findings:

• Sharpest fall in total activity since June
• Residential work declines at fastest pace in 2026 to date
• Input price inflation accelerates to four-month high

UK construction companies signalled a sharp and accelerated reduction in business activity during October. At 43.6, down from 46.1 in September, the headline seasonally adjusted S&P Global UK Construction Purchasing Managers’ Index™ (PMI®) – an index tracking changes in total industry activity – registered below the neutral 50.0 value for the twenty-second month running. Moreover, the rate of contraction was the steepest since June.

Residential activity (index at 35.1) was by far the weakestperforming segment, with the latest reading the lowest since December 2025 and indicative of a steep drop in house building. Anecdotal evidence cited low consumer confidence, elevated risk aversion and headwinds from rising borrowing costs.

Civil engineering work (45.9) decreased in October, but the pace of contraction was the slowest since May 2025. Commercial activity (46.3) also showed some resilience, although the latest reading eased from September’s 16-month high.

Total new work received by construction companies fell at the sharpest pace since June, reflecting subdued market conditions and fragile customer demand. A number of firms commented on more cautious budget setting among clients and fewer opportunities to tender. However, there were some reports of improved order books due to higher infrastructure spending (data centres, energy networks and utilities projects).

October data pointed to another sharp reduction in purchasing activity across the construction sector, largely due to a lack of new work to replace completed projects. Despite weaker demand for construction products and materials, supplier performance deteriorated for the third month running. Moreover, the latest lengthening of vendor lead times was the greatest since May. This was linked to low stocks, transport delays and spillovers from stretched manufacturing supply chains.

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Input cost inflation meanwhile accelerated sharply from the seven-month low seen in September. The latest rise in purchasing prices was the steepest since June and well above the long-run survey average. Many construction companies reported fuel surcharges, alongside increased energy costs and raw material prices (especially aggregates, concrete, electrical items and steel).

Finally, the proportion of construction companies expecting an increase in their output levels during the year ahead (34%) exceeded those forecasting a decline (27%) by only a narrow margin. This signalled the lowest net sentiment towards the business outlook since May. New infrastructure projects were cited as a positive factor for business activity in the next 12 months, while political and economic uncertainty were seen as the main challenges. 

Tim Moore, Economics Director at S&P Global Market Intelligence, said, “October data indicated a setback for the UK construction sector after some signs of stabilisation in the previous month. Business activity decreased at the fastest pace since June amid the steepest reduction in residential work so far this year.

“Construction companies commented on severe headwinds in the house building sector from rising borrowing costs, weak consumer confidence and elevated economic uncertainty. However, there were reports of strong demand for data centre projects, alongside rising workloads in the energy and utilities sectors. Resilient infrastructure spending contributed to the slowest fall in civil engineering activity since May 2025.

“On the supply side, there were again delays with deliveries for construction products and materials. Moreover, input price inflation intensified, largely due to fuel surcharges and higher energy costs. Almost half of the survey panel (48%) indicated an increase in their input costs in October, up from 25% in September.

“Faced with rising input price inflation, higher borrowing costs and reduced order books, construction firms were unsurprisingly cautious about the year ahead business outlook. The degree of optimism towards activity growth eased again in October and now sits at one of the lowest levels since the end of 2022.”

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