The UK construction sector continued to shrink in May 2025, but the pace of decline showed signs of slowing. The headline global construction PMI rose to 47.9, up from 46.6 in April, signalling the mildest contraction in output since January. New orders also fell at a reduced pace, suggesting tentative signs of stabilisation, though the industry remains in recession territory.

However, job losses accelerated, marking the sharpest drop in employment since August 2020, as firms remained cautious about rehiring amid subdued workloads and cost pressures. Residential construction led the downturn, with housebuilding activity weakening further (index at 45.1) due to dampened demand and continued client hesitancy. Civil engineering (45.9) declined for a fifth month, while commercial activity (49.5) was near stabilisation.

Purchasing activity dropped for the sixth consecutive month, easing supply pressures and improving delivery times, the best seen since September 2024. Cost inflation persisted, especially for materials like timber and insulation, but overall price pressures moderated. Despite uncertainty, business confidence improved modestly, buoyed by hopes of a housing market recovery, infrastructure investment, and lower interest rates stimulating demand.

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.