IN Brief:
- The S&P Global UK Construction PMI fell to 39.7 in April, down from 45.6 in March.
- Input cost inflation reached its highest level since June 2022, with 69% of respondents reporting higher costs.
- Civil engineering and residential work recorded the sharpest falls in activity, while commercial building contracted less severely.
S&P Global Market Intelligence has reported one of the sharpest monthly rises in UK construction input cost inflation on record, adding pressure to a sector already facing weaker activity and delayed starts.
The S&P Global UK Construction Purchasing Managers’ Index fell to 39.7 in April, down from 45.6 in March. The reading was the weakest since November and remained well below the 50 mark that separates growth from contraction.
The input cost inflation index rose to 81.4, its highest level since June 2022. The move from 70.5 in March was the second-largest monthly increase since the series began in 1997. Around 69% of survey respondents reported higher input costs in April, compared with 48% the previous month.
Fuel surcharges, raw material price rises, and international shipping delays were all cited as contributors. S&P Global also reported the most widespread delays in supplier delivery times since December 2022. New orders declined at the sharpest rate since November, while employment weakened as companies responded to lower workloads and higher payroll costs.
Civil engineering and residential housebuilding recorded the steepest reductions in activity. Commercial building also contracted, although the fall was less severe. Business expectations remained positive overall, but confidence fell to its lowest level since November.
The data lands in a market already under viability pressure. IN Site recently reported that the Home Builders Federation has warned of a £76,000 increase in the cost of building a new home since 2020, covering labour, materials, regulation, taxes, levies, and site-specific mitigation. IN Site has also covered how Glenigan’s April review showed project starts and detailed planning approvals weakening, despite resilience in some contract awards.
Those indicators expose the distance between headline pipeline and deliverable workload. Planning consent, policy ambition, and contract award volumes can lose momentum when cost plans move, finance remains expensive, and developers face uncertain end-market demand.
Pricing risk is now moving back to the front of procurement discussions. Fast-moving input costs can undermine tender assumptions, especially on projects where prices were prepared months before mobilisation. Fuel and transport costs are particularly difficult to manage because they cut across aggregates, concrete, steel, timber, M&E components, plant movement, waste removal, and distribution.
Subcontractor pricing is becoming more sensitive as specialist businesses carry labour, insurance, materials, and finance pressure. Bids may include larger risk allowances, shorter validity periods, or more explicit exclusions. Main contractors trying to maintain cost certainty through two-stage procurement, framework call-offs, or fixed-price negotiations will face tougher conversations across the supply chain.
The fall in civil engineering activity is notable because infrastructure has been one of the more resilient areas of the UK market. Energy, water, highways, defence, and regulated-asset programmes continue to generate demand, but the PMI data shows that wider civils activity remains exposed to delayed starts, funding caution, and cost escalation.
Residential weakness remains acute. Housebuilding is exposed to mortgage affordability, planning uncertainty, regulatory change, land values, and buyer confidence. Higher input costs add another constraint to appraisals that are already under pressure, particularly for SME builders and regional developers with less room to absorb upfront obligations.
The market still has stronger pockets of work. Energy infrastructure, selected public-sector programmes, mission-critical buildings, and parts of maintenance and repair continue to move. The difficulty is breadth. A sector carried by a narrow group of resilient markets becomes more vulnerable when cost shocks arrive quickly. Until demand, finance, and pricing stabilise together, contractors are likely to remain selective about workload, risk transfer, and tender exposure.