Construction activity in the UK declined for the ninth month in a row in August, according to the latest PMI report.

The Purchasing Managers Index (PMI) for September 2025 was 46.2, marginally up from August’s 45.5 score – but still solidly below the 50.0 no-change mark.

The slower reduction in overall construction activity in September was helped by a weaker fall in residential building work (index at 46.8).

Civil engineering (42.9) was the weakest performing segment, although activity also decreased at a softer pace than in August. Commercial construction (46.4) was the only sub-sector to register a faster rate of decline in September.

A lack of new project starts was again the main factor holding back construction output. September data indicated that order books deteriorated for the ninth month in a row, albeit only marginally and at the slowest pace over this period.

Survey respondents often noted that subdued demand, elevated business uncertainty and general hesitancy among clients had made it difficult to convert sales opportunities. Some firms nonetheless commented on new business wins related to energy projects.

Mirroring the trend for new work, latest data indicated a reduction in employment numbers for the ninth consecutive month. Construction companies cited ongoing hiring freezes and the non-replacement of departing staff in response to fewer workloads, although some reported a rise in the recruitment of apprentices.

Business activity expectations for the year ahead meanwhile remained subdued, with confidence levels broadly unchanged since August and the second-lowest since December 2022. Some construction companies reported hopes of a boost from infrastructure spending, energy sector demand, lower interest rates and planning approvals (including the need for improvements to the Building Safety Act approvals system).

However, this was offset by concerns about the UK economic outlook, cutbacks to capital expenditure plans and reports of uncertainty among clients ahead of the Autumn Budget.

Tim Moore, Economics Director at S&P Global Market Intelligence, said: “September data suggested that the UK construction sector faced pressure on multiple fronts as residential, commercial and civil engineering work all continued to decrease at solid rates.

“Lower volumes of overall construction output have been recorded since January, although the latest reduction was the slowest for three months and the downturn in new orders was the softest so far in 2025.

“Business activity expectations for the year ahead were among the lowest since the end of 2022, suggesting that construction companies remained cautious about the near-term outlook and have yet to see a turning point on the horizon.

“Some firms hope for a boost from lower borrowing costs and noted new sales pipelines in areas such as energy security markets and infrastructure projects. However, many survey respondents reported caution among clients ahead of the Autumn Budget and a general reluctance to commit to major capital expenditure projects against a subdued domestic economic backdrop.”

Brian Smith, head of cost management at AECOM, added: “The index is edging towards the key 50.0 mark, a sign that conditions may be starting to steady. But activity is still falling, and with inflationary pressures biting, contractors will need to see some shifts in the market to lift new orders as we head into the winter months.

“It’s essential that the recovery in housebuilding materialises sooner rather than later and that the commercial sector continues its solid performance, as Grade-A space remains in short supply.

“However, ongoing inflationary pressures are still hitting the sector, driving up costs and holding back growth. The frustration for firms is that these pressures are beyond their control.

“All contractors can do is position themselves in the best way possible by moving quickly and diligently to secure the new work that is available and optimise their capacity so they’re ready to seize on the pipeline of new work promised by the government.”

Meanwhile, the October 2025 edition of Glenigan’s Construction Index, which looks at the three months to the end of September 2025, also paints a bleak picture of continuing decline with increases observed over spring and summer now feeling like a “distant memory”.

The index of construction starts under £100m saw performance plummet, with market confidence in short supply.

Starts on-site dropped 16% during the index period, remaining 15% below 2024 levels. Residential construction starts crashed, falling 26% on the preceding three months to September and 24% against last year.

Non-residential project starts declined 9% against the previous quarter, standing 5% down on a year ago and civils work starting on-site increased 4% from Q2 2025, but fell 13% from 2024.

On a more positive note, similar to last month’s index, office starts were on the up. A relatively strong period, starts on-site soared by a third (32%) against the preceding three months and rocketed 123% on the previous year.

Glenigan economic director, Allan Wilen, said: “It feels somewhat like déjà vu, where encouraging signs in the middle of the year have once more given way to further decline. Of course, there are several different factors at play.

“Looking at the residential market, project starts have faltered over the past quarter, which, perhaps, reflects the slower-than-anticipated recovery in house purchaser confidence, coupled with ongoing developmental delays. This is in part due to slow BSR (Building Safety Regulator) approvals, which account for the sharp fall we registered in the apartment sub-vertical.

“It was great to see office starts continue its ascendancy and encouraging to see confidence flooding back into a vertical which has been largely subdued in recent years. However, these positive results were not nearly enough to mitigate the poor performance in other quarters, particularly health and education, which eclipsed these outlying areas of growth. 

“As uncertainty once again tightens its grip, the industry will be looking ahead to the Autumn Budget to see what rabbits, however small, the chancellor can pull from her hat, to help kick-start activity.”