UK construction output continued its subdued trajectory in June 2025, marking the sixth consecutive monthly contraction. The overall PMI reading rose slightly to 48.8, up from 47.9 in May, signalling the slowest rate of decline this year, but still below the growth threshold of 50. The downturn was driven by sharp falls in commercial construction (45.1) and civil engineering (44.2), with firms citing poor economic conditions and reduced client investment.

A glimmer of hope came from residential building, which saw marginal growth (50.7) for the first time since September 2024, thanks to new project starts and improved sales pipelines. However, this was not enough to offset the broader sector slump.

New orders declined at a faster pace for the sixth straight month, intensifying concerns about the future. Weaker demand led to ongoing job cuts and cautious purchasing behaviour, although supplier performance improved notably. Material costs, especially for timber, concrete, and insulation, continued to rise, but cost inflation slowed to its lowest level since January.

Business optimism fell to its lowest point since December 2022, with only 34 percent of firms expecting growth ahead. Mounting economic uncertainty and risk-averse client behaviour continue to cast a shadow over the sector's recovery.

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.