Civil engineering and constructionNews

Fastest downturn in construction output since May 2020

February PMI® data highlighted another fall in UK construction output, with the speed of decline accelerating considerably since the start of 2025.

At 44.6 in February, down from 48.1 in January, the headline S&P Global UK Construction Purchasing Managers’ Index™ (PMI®) – a seasonally adjusted index tracking changes in total industry activity – registered below the neutral 50.0 threshold for the second month running. The latest reading was also the lowest for nearly five years and signalled a steep decline in total construction activity.

Residential building (index at 39.3) decreased for the fifth month in a row and was the weakest-performing area of construction activity in February. Aside from the pandemic, the rate of decline was the fastest since early-2009. Survey respondents often cited weak demand conditions, headwinds from elevated borrowing costs and a lack of new work to replace completed projects.

Civil engineering activity (39.5) also registered a steep decline in February. The respective seasonally adjusted index was the lowest since October 2020. Commercial construction (49.0) displayed a degree of resilience, with output levels falling only marginally and at a similar pace to that seen in the previous survey period.

February data pointed to worsening demand conditions across the construction sector. New order intakes decreased sharply and to the greatest extent since May 2020. Survey respondents noted delayed decision-making among clients, reflecting squeezed budgets and concerns about the economic outlook. Some firms also noted the impact of cutbacks to business investment spending plans.

Atul Kariya, head of construction and real estate at MHA, a leading accounting and advisory firm, comments on today’s S&P construction PMI data: “Following the dramatic decline in construction activity last month, another fall in the PMI data to 44.6 is hardly surprising given that the economic fundamentals have not significantly changed. This is the sharpest fall since December 2019 and the second month in a row that activity has dipped below 50.0

The construction sector continues to face global headwinds and multiple cost pressures. The industry has battled through in a post-Brexit, post pandemic environment; however, the high corporation tax rate in comparison to other markets and the increase in employment taxes are not a great recipe for creating long term economic growth or stimulating investment into construction.

Starmer’s announcement on housebuilding is positive news, but as today’s data shows, residential building has fallen for the fifth month in a row. While the infrastructure sector remained relatively resilient compared to residential and civil engineering, activity levels still remain below 50. More investment is required to sustain any type of recovery.

The Spring statement is an opportune time for the government to look at the UK economic environment and potentially consider some revisions to their fiscal plans. The UK must create the right environment to provide confidence to investors and construction companies.”

Accenture’s UK Capital Projects lead, Huda As’ad, said: “Uncertainty and delayed decision making on major projects are taking its toll on the construction sector. As we witness another fall in construction output – with levels at a near five-year low – the combined pressures of slowing demand and supply chain struggles continue to pile pressure on the industry. To break free from stagnation, the sector must focus on being resilient and modernising itself for a new world. The UK has great engineering talent, although we need so much more, but the construction sector needs to embrace more digitisation, and quickly, to navigate a fast-moving landscape. Innovative insights and efficiencies gained from data and AI could breathe new life in how major projects are planned and engineered in the UK.”

If you would like to read more stories like this, then please click here

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *