The latest data from the S&P Global UK Construction Purchasing Managers’ Index (PMI) showed ongoing reductions in new orders and staffing levels. However, there were some early signs of stabilisation, with business confidence showing modest improvement.

The headline PMI rose slightly to 46.6 in April, up from 46.4 in March, indicating the slowest rate of contraction in three months. Despite remaining below the 50.0 threshold that separates growth from contraction, the figure suggests that the downturn in construction activity may be starting to ease.

Residential construction showed relative strength compared to other sectors. The rate of decline in housing activity eased to 47.1—the mildest contraction so far in 2025. Among the three main categories tracked, residential work saw the slowest drop in output.

Civil engineering continued to struggle, posting the weakest performance at 43.1. The sector saw a sharp decline as firms faced a lack of new contracts to replace completed work. Commercial construction also remained under pressure, with activity falling for the fourth straight month. At 45.5, commercial work experienced its fastest rate of decline since May 2020, largely due to client caution amid broader economic concerns.

New business volumes fell steeply in April, marking the second-fastest decline in new work since the early stages of the pandemic in May 2020. Respondents commonly cited weak business and consumer confidence as contributing factors.

Reflecting reduced workloads, purchasing activity dropped at its quickest pace in nearly five years. However, softer demand for materials led to marginal improvements in supplier delivery times for the third month in a row. Some companies still reported delays linked to international shipping issues.

Despite falling demand, construction firms faced ongoing cost pressures. Prices rose sharply in April, particularly for concrete, insulation, and timber. Some firms benefited from lower fuel prices, but many noted suppliers were passing on higher wage costs.

Employment in the sector also declined for the fourth month running, although the pace of job losses slowed. Companies cited weak demand and rising labour costs as reasons for not replacing departing staff.

Despite the current headwinds, outlooks for the coming year are cautiously optimistic. Around 41% of survey respondents expect business activity to rise over the next 12 months, compared to 18% who anticipate a decline. This marks the highest level of optimism recorded since December 2024. Many firms are hopeful that residential building activity will rebound, even as overall client confidence remains fragile.

Tim Moore, economics director at S&P Global Market Intelligence, said: “UK construction companies have faced a challenging start to the year due to domestic economic uncertainty and delays in new work. April saw another decline in output, though the rate of contraction was the slowest since January. Residential and civil engineering activity helped soften the downturn.

“Commercial construction, however, weakened further as clients adopted a cautious approach to major investments. Input buying dropped sharply, but cost pressures persisted. Input price inflation remained high, driven by rising material and labour costs.

“A positive takeaway from April was the slight rise in business confidence. Expectations for growth, especially in residential construction, improved to the strongest level seen this year.”

Brian Smith, head of cost management and commercial at AECOM, added: “Although activity remains below the growth threshold, the slowing pace of decline is encouraging. We hope to see recovery in output and order books as we head into summer.

“Government rhetoric around infrastructure and housebuilding as growth drivers is promising—but funding remains unclear. The upcoming Spending Review is a key moment to establish a clear public-private funding strategy for major projects.

“There’s no single solution to revitalising the sector. An interest rate cut could help, but longer-term drivers like planning reform will be essential to sustained growth.”