UK’s construction slump eases despite prolonged stretch of job cutting

A slowdown across the UK’s construction sector eased last month as housebuilding activity picked up pace, despite facing the longest stretch of job cutting since the pandemic, a new survey shows.

The latest S&P Global UK construction purchasing managers’ index (PMI) showed a reading of 46.2 in September, up from 45.5 in August and its highest level for three months.

However, the score remains below the neutral 50.0 threshold, indicating that activity is contracting – while anything above suggests it is expanding.

Construction work has been falling since the beginning of the year, according to the PMI surveys.

However, housebuilding declined at a slower rate in September than the previous month, as did civil engineering.

The level of new orders that builders received continued to fall, but at the slowest pace since the start of 2025.

Despite signs of improvement, construction firms continue to report hesitancy among their customers to commit to new projects.

Tim Moore, the economics director for S&P Global Market Intelligence, said: “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.”

Meanwhile, the latest PMI showed that staffing levels fell for the ninth month in a row, with builders surveyed citing ongoing hiring freezes and decisions not to replace those who leave amid smaller workloads.

“Weak business optimism, shrinking workloads and robust cost pressures once again led to lower employment numbers across the construction sector,” Mr Moore said.

“Lower staffing levels have now been recorded for nine months in a row, which is the longest period of job shedding since the pandemic.”

Matt Swannell, chief economic adviser to the EY ITem Club, said the PMI data “should be taken with a heavy pinch of salt as it probably reflects downbeat business sentiment rather than a true shift in activity”.

“Continued speculation around autumn Budget tax rises will have weighed on the construction sector’s mood, compounded by signals from the Bank of England that it is unlikely to cut interest rates again this year,” he said.

Mr Swannell added that rising Government investment and reforms to ramp up housebuilding will help give demand for construction work a boost.