IN Brief:
- The RICS total-workloads balance improved from -12% in Q1 to -4% in Q2 2026.
- Infrastructure rose to +16%, led by energy at +39%, water and sewage at +23%, and communications at +22%.
- Financial constraints were cited by 67% of respondents, while planning and regulation were cited by 61%.
RICS has reported an improvement in UK construction workloads during the second quarter of 2026, although the headline measure remained negative and private-sector activity continued to lag infrastructure.
The total-workloads net balance rose to -4% in Q2 from -12% in the first quarter. It was the fifth consecutive negative quarterly reading, with RICS describing the improvement as a partial recovery from the sharper deterioration seen earlier in the year rather than evidence of strong underlying momentum.
Private housing remained the weakest main sector at -12%, improving from -19%. Private commercial moved from -15% to -7%, while private industrial rose from -15% to -9%.
Public-sector activity was firmer. Public housing recorded a +1% balance, compared with -2% in Q1, while other public works increased to +9% from -1%.
Infrastructure produced the strongest reading at +16%, up from +4% in the previous quarter and its strongest result for seven quarters. The spread within infrastructure also widened, with several subsectors showing materially stronger activity.
Energy led at +39%, up from +24%, followed by water and sewage at +23%, communications at +22%, rail at +10%, and roads at +7%. Harbours remained marginally negative at -2%.
The sector split leaves contractors facing markedly different operating conditions depending on workload mix. Businesses concentrated on power, water, or communications can encounter stronger pipelines while companies exposed primarily to private housing or commercial development continue to work in weaker markets.
Forward expectations improved alongside current workloads. The twelve-month workload-expectations balance increased to +13% from +2%, with infrastructure expectations reaching +34%.
Private residential expectations returned to positive territory at +6%, compared with -2% previously, while private non-residential expectations rose to +11% from -4%. Employment expectations increased to +14% from +8%.
Profitability remains more constrained. Profit-margin expectations improved from -27% to -10%, but the balance is still negative, indicating that anticipated workload growth is not yet being matched by equally strong expectations for margins.
Cost projections help explain that caution. Respondents expect material costs to rise by 6.7% over the next twelve months, skilled labour costs by 5.2%, and unskilled labour costs by 3.9%.
Financial constraints remain the most frequently cited obstacle to activity, identified by 67% of respondents. Planning and regulation followed at 61%, with feedback continuing to refer to Building Safety Regulator processes and gateway approval timescales.
Labour shortages were cited by 36%, while material shortages increased to 25% from 18%. Insufficient demand remained broadly unchanged at 43%.
Credit expectations have improved substantially since the first quarter but remain negative. The three-month forward balance rose to -21% from -51%, while the twelve-month outlook improved to -13% from -42%.
Those figures indicate less pessimism around financing rather than easy credit conditions. Clients still need projects to clear viability, planning, regulatory, and funding hurdles before improved sentiment translates into awarded work and site activity.
The combination of stronger workload expectations and negative margin expectations is also significant for bidding strategy. Contractors may see more opportunities entering the pipeline while remaining reluctant to absorb material, labour, financing, or regulatory risk simply to secure turnover. That can keep tender pricing disciplined even before the overall workload balance returns to growth.
For clients, the uneven sector picture can affect both procurement capacity and programme assumptions. Infrastructure specialists exposed to stronger energy and water demand may face different resource pressures from building contractors working in softer private markets, so labour and subcontractor availability cannot be inferred from the national headline alone.
The findings sit alongside July construction PMI data showing that the pace of contraction eased after a difficult second quarter. The surveys use different methodologies, but both show conditions becoming less severe without yet indicating broad-based expansion.
The infrastructure reading remains the principal dividing line. Energy, water, communications, and rail are providing positive workload balances while most private building sectors remain below zero, leaving labour, plant, and supply-chain demand uneven across the industry.
That divergence also affects tendering. Contractors with access to stronger infrastructure programmes may be able to maintain utilisation, while businesses competing for a narrower pool of private-sector work can face greater pressure on price at the same time that labour and material costs remain elevated.
The next quarter will show whether the improvement in expectations converts into actual starts. A return of the headline workload balance above zero would require more than continued infrastructure strength; private housing, commercial, and industrial work would also need to move closer to sustained growth.
