IN Brief:
- The UK Construction PMI fell to 38.2 in May from 39.7 in April.
- Housebuilding remained the weakest segment, with residential activity at 36.0.
- Contractors reported falling new work, job cuts, weaker confidence, and rising input costs.
S&P Global Market Intelligence data shows UK construction activity fell at its steepest pace for six years in May, with housebuilding, commercial work, and civil engineering all remaining in contraction.
The headline UK Construction PMI dropped to 38.2 from 39.7 in April, marking a seventeenth consecutive month below the 50.0 no-change threshold. The latest reading was the weakest since the pandemic shock of May 2020 and, outside that period, the lowest since March 2009.
Housebuilding remained the weakest part of the sector, with the residential activity index at 36.0. Commercial work fell to 39.0 as client caution increased, while civil engineering also stayed under pressure at 36.2, although its pace of decline eased slightly.
Contractors reported the fastest fall in new work for six years as project delays, deferred investment decisions, and budget cuts reduced tender opportunities. Political and economic uncertainty were also cited by companies as factors holding back demand.
The downturn is now feeding through into purchasing, employment, and confidence. Construction companies cut jobs again in May and reduced buying activity, while business optimism weakened sharply. Supplier delivery times lengthened for a third consecutive month, with delays reaching their worst level since December 2022.
Input cost inflation also accelerated. Nearly two-thirds of companies reported higher purchasing costs during May, pushing the input prices index to its highest level since June 2022. Fuel surcharges, energy bills, transport costs, shipping disruption, and material shortages all contributed to the rise.
The figures add pressure to a delivery base already wrestling with cashflow strain. Construction SMEs have been facing mounting payment pressure, with late payment, HMRC arrears, material inflation, and unstable pipelines creating difficult trading conditions for smaller contractors and subcontractors.
The housing figures are particularly difficult against national delivery targets. Planning reform, remediation obligations, energy-performance requirements, and housing demand all rely on a construction base with enough confidence and capacity to raise output. May’s survey points instead to weaker starts, lower confidence, and a subdued private development pipeline.
Cost inflation makes that weakness harder to absorb. In a slower market, contractors would normally expect reduced demand to ease material prices. May’s data suggests supply-chain friction is keeping costs elevated while available workload falls, squeezing margins from both sides.
Energy infrastructure remains one of the few stronger areas. Companies reported that upcoming power network and infrastructure schemes continued to generate opportunities, reflecting the growing role of grid, utilities, and regulated infrastructure work as housing and commercial markets soften.
The split between weaker private building markets and more resilient infrastructure work is likely to shape construction strategy through the rest of the year. Contractors with exposure to energy, utilities, public frameworks, and regulated infrastructure may find more stable workloads, while those reliant on private housing and commercial starts face a thinner pipeline.
The market is not short of long-term demand. Homes, energy systems, schools, hospitals, transport upgrades, and water infrastructure are all needed, but May’s figures show that demand is not yet converting into broad activity across the construction economy.
