The UK construction sector faced another challenging month in March 2025, contracting for the third consecutive time. Although the S&P Global UK Construction PMI edged up slightly to 46.4 from February's low of 44.6, it remained well below the neutral 50.0 mark, signalling continued decline. Civil engineering was hardest hit, with a contraction of 38.8, while residential and commercial building also experienced declines amid weak demand and economic uncertainty.

Delayed projects, subdued investment, and a lack of new enquiries dragged down order books, compounding financial strain. Rising input costs, now at their highest in over two years, further squeezed margins. In response, firms accelerated job cuts at the fastest pace since October 2020 and scaled back purchases and subcontractor use.

Business confidence dipped to its lowest since October 2023, dampened by high interest rates and geopolitical instability. However, some optimism lingered regarding future demand in renewable energy and infrastructure recovery. Overall, the report reflects a sector under pressure, balancing economic headwinds and cautious hope for long-term improvement.

The Construction Purchasing Managers' Index (PMI) provides an estimate of business activity in the UK construction sector for the preceding month based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 170 construction companies. The panel is stratified geographically and by Standard Industrial Classification (SIC) group, based on the regional and industry contribution to gross domestic product. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are compiled by the Chartered Institute of Purchasing and Supply (CIPS) and S&P Global.

The survey is based on techniques successfully developed in the USA over the last 60 years by the National Association of Purchasing Management. It is designed to provide one of the earliest indicators of significant change in the economy. The data collected are not opinion on what might happen in the future, but hard facts on what is actually happening at 'grass roots' level in the economy. As such the information generated on economic trends pre-dates official government statistics by many months.