UK construction activity contracts at fastest pace since 2020 as PMI signals deepening sector slowdown and weak demand.
- +UK Construction Contracts At Fastest Pace Since 2020, PMI Shows
Britain’s construction industry contracted at its sharpest pace in six years last month, as economic uncertainty and rising inflation pressures linked to global tensions led to a steep drop in new projects, according to a fresh survey.
Britain’s construction industry contracted at its sharpest pace in six years last month, as economic uncertainty and rising inflation pressures linked to global tensions led to a steep drop in new projects, according to a fresh survey.
The S&P Global Purchasing Managers’ Index (PMI) for construction fell to 38.2 in May, down from 39.7 in April, marking its weakest reading since May 2020, when the COVID-19 pandemic brought much of the sector to a halt.
The latest figure remains well below the 50 point threshold that separates growth from contraction a level the sector has stayed under since the start of 2025. It also came in significantly lower than economists’ expectations of 40.2 in a Reuters poll.
Surveyed firms pointed to worsening demand conditions, fewer tender opportunities, and ongoing project delays. Many attributed the slowdown to broader economic uncertainty, including geopolitical tensions in the Middle East and continued domestic political concerns.
Residential construction recorded the steepest decline, while commercial projects such as offices and retail spaces saw a relatively milder downturn.
At the same time, cost pressures intensified. Input prices rose at the fastest rate since June 2022, driven largely by higher fuel, energy, and transport expenses. Companies also reported widespread supply chain delays, with shipping disruptions at their worst since late 2022, partly linked to instability affecting key trade routes.
Tim Moore, Economics Director at S&P Global Market Intelligence, noted that increased fuel surcharges and rising costs for energy-intensive materials continued to weigh heavily on construction firms across the supply chain.
Business sentiment also weakened further, with optimism for the next 12 months falling to its second-lowest level since late 2022, as firms grew increasingly concerned about order book stability and the near-term economic outlook.
Employment in the sector continued to decline for the 17th consecutive month, although job losses slowed slightly compared with April.
Meanwhile, the broader UK economy also showed signs of strain. The all-sector PMI which includes services and manufacturing dropped to 48.7 in May from 51.5 in April, marking its weakest level since major tariff announcements in 2025 unsettled global markets.
