| Actual | Previous | |
| Index | 44.3 | 44.7 |
Highlights
The UK construction sector remained firmly in recessionary territory in August 2026, with the construction PMI declining from 44.7 to 44.3, its twentieth consecutive month below the 50.0 threshold. The downturn was broad-based but disproportionately driven by residential construction, where the index fell to 37.6 amid weak demand and fewer housing starts. Commercial construction showed greater resilience at 47.8, while civil engineering’s contraction moderated to 40.5.
Encouragingly, new orders and employment declined at their slowest rates since September 2025 and February 2026, respectively. The first increase in subcontractor usage in almost two years may also indicate cautious preparations for future demand. Nevertheless, sharply reduced purchasing activity suggests that firms remain focused on controlling costs rather than expanding capacity.
Inflationary pressures persisted through higher fuel, transport and raw-material costs, although input-price inflation eased to a six-month low as suppliers adopted more competitive pricing. Business expectations consequently remain cautiously positive as 38 percent of firms anticipate output growth, compared with 20 percent expecting contraction. In summary, the sector appears to be approaching stabilisation, but weak housing demand, economic uncertainty and geopolitical risks continue to constrain a convincing recovery.
Definition
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.
Description
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.