UK construction remained in contraction territory in August 2025, though the downturn showed signs of easing. The global UK construction PMI rose slightly to 45.5 from July's five-year low of 44.3, still well below the neutral 50 mark. Civil engineering was hit hardest, with activity falling to 38.1, the steepest decline since October 2020. Housebuilding also weakened sharply (44.2), while commercial activity (47.8) proved comparatively resilient. Firms cited a persistent lack of new projects, intense price competition, and sluggish wider economic conditions as barriers to recovery.

Employment continued to shrink as companies froze recruitment and avoided replacing departing staff, producing the fastest decline since May. Subcontractor use and purchasing activity also fell markedly, reflecting subdued pipelines. However, softer demand for materials reduced supply chain pressures, with delivery times improving and input cost inflation slowing to its weakest in nearly a year.

Despite these cost-side reliefs, sentiment slumped to its lowest since December 2022, with only one-third of firms expecting output growth in the year ahead. While lower borrowing costs and potential infrastructure spending offered glimmers of hope, risk aversion among clients underscored the fragile state of the industry.

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.