UK construction downturn deepens in August
By Michele Maatouk
Date: Friday 04 Sep 2026
(Sharecast News) - The downturn in the UK construction sector deepened in August, according to a survey released on Friday.
The S&P Global construction purchasing managers' index fell to 44.3 from 44.7 in July, coming in below the 50.0 mark that separates contraction from expansion for the 20th month in a row.
Survey respondents pointed to subdued demand conditions and a reduction in new projects, especially house building starts. All three sub-sectors recorded a reduction in construction activity, with housing the only category to register a faster pace of contraction than in July.
The downturn in residential work was sharper than elsewhere in the construction sector, while commercial activity fell at the slowest rate since January, and civil engineering activity fell the least since March.
Tim Moore, economics director at S&P Global Market Intelligence, said: "UK construction companies experienced another solid reduction in output volumes, with a faster downturn in house building the main reason for a weaker overall performance during August. A sharp and accelerated drop in residential activity more than offset slower falls in the commercial and civil engineering sub-sectors.
"Sluggish demand conditions and low client confidence, combined with anxiety about the impact of the Middle East conflict, were again factors contributing to lower workloads across the construction sector. Total new business nonetheless decreased to the least marked extent for 11 months amid reports of support from transport infrastructure work and some pockets of vitality such as data centre roll outs and energy sector projects.
"Encouragingly, input price inflation eased to its lowest since February and supply chain performance was broadly stable. Softer overall inflation was recorded in August despite upward pressure on operating expenses from higher fuel bills, logistics costs and raw material prices.
"Business optimism was still subdued, as growth projections for the year ahead eased since July and were much weaker than historic trends. Concerns about geopolitical tensions, lacklustre domestic economic prospects and elevated borrowing costs were all noted as holding back confidence."
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