This comes after three consecutive months of growth, including a 0.8% rise in April, which had raised hopes of a sustained recovery.

The monthly fall was driven entirely by a 2.1% decline in repair and maintenance work. Within this category, non-housing repair and maintenance dropped by 2.4%, while private housing repair and maintenance saw a 1.8% decrease. In contrast, new construction work continued its upward trend, increasing by 0.6% over the same period.

Despite the dip in May, total construction output over the three months to May 2025 grew by 1.2%, buoyed by a 0.9% rise in new work and a 1.5% increase in repair and maintenance activity.

Industry leaders have responded with a mix of concern and cautious optimism.

Clive Docwra, managing director at McBains, said the figures would be “disappointing” to an industry hoping for consistent growth.

“After last month’s figures showed the construction sector outperformed the overall economy in April, today’s news will disappoint the industry and increase doubts that growth is on an upward trajectory,” said Docwra.

He noted that the fall was driven by repair and maintenance, while new orders rose, indicating some underlying resilience. “Order books are still playing catch-up, so the hope is that recent announcements such as the £39 billion funding to build more affordable homes will provide a confidence boost when the sector most needs it, given the ongoing uncertain global economic picture.”

Scott Motley, head of programme, project and cost management at AECOM, echoed the concern but pointed to upcoming government initiatives as cause for optimism.

“A dip in output, particularly after a positive couple of months, will come as a disappointment for many contractors,” Motley said. “However, there is hope that recent government commitments and the warmer weather will support steady growth in the coming months.”

He highlighted the government’s new five-step plan for social and affordable housing, along with the £39 billion 10-year Affordable Homes Programme, as major opportunities for the housing sector to contribute to national economic growth. He also encouraged public-private partnerships to help bridge funding gaps and manage risk.

Terry Lloyd, head of vendor finance at Paragon Bank, stressed the structural challenges facing the industry, from labour shortages to supply chain issues and rising material costs.

“This fall relates specifically to repair and maintenance, however, while new work was more positive, up by 0.6%,” Lloyd noted. “Despite some of these persistent headwinds, appetite for finance to invest in new equipment and modernise operations remains strong among SMEs.”

Lloyd added that many small firms appear to be “taking a long-term view, using this period to futureproof their businesses,” with Paragon continuing to offer tailored funding support to help them stay resilient.

As the sector navigates a complex mix of challenges and opportunities, the coming months will be crucial in determining whether the positive momentum in new work can offset the volatility seen in maintenance and repair.