UK housebuilding activity fell sharply in August as subdued demand and fewer project starts continued to weigh on the construction sector.
The latest S&P Global UK Construction PMI shows residential activity dropped to 37.6 in August, with any reading below 50 signalling contraction.
Housing was the weakest of the three construction categories and the only one to record a faster rate of decline than in July.
The wider Construction PMI Total Activity Index fell from 44.7 in July to 44.3 in August, leaving the industry below the 50 growth threshold for the twentieth consecutive month.
HOUSEBUILDING HIT HARDEST
Survey respondents frequently reported subdued demand and a reduction in new projects, particularly housebuilding starts.
Commercial construction also remained in decline at 47.8, although activity fell at its slowest rate since January. Civil engineering registered 40.5, its least severe contraction since March.
There was some improvement in the pipeline of future work. New orders continued to fall but at the slowest rate since September 2025, helped by transport infrastructure projects and pockets of activity in areas including data centres and energy.
Employment fell again as construction businesses responded to a lack of new work and continued cost pressures, although the rate of job losses was the weakest since February.
CONFIDENCE REMAINS WEAK
Input price inflation eased to a six-month low despite firms continuing to report higher fuel, transport and raw material costs.
Tim Moore, Economics Director at S&P Global Market Intelligence, says: “UK construction companies experienced another solid reduction in output volumes, with a faster downturn in house building the main reason for a weaker overall performance during August.
“A sharp and accelerated drop in residential activity more than offset slower falls in the commercial and civil engineering sub-sectors.”
Moore says sluggish demand, low client confidence and geopolitical uncertainty continue to hold back workloads, although the slower decline in new business provides some encouragement.
He adds: “Business optimism was still subdued, as growth projections for the year ahead eased since July and were much weaker than historic trends.
“Concerns about geopolitical tensions, lacklustre domestic economic prospects and elevated borrowing costs were all noted as holding back confidence.”
