UK construction ended 2025 in contraction, but there were tentative signs of stabilisation, according to the latest S&P Global Construction Purchasing Managers’ Index.
Overall activity remained firmly in contraction, with the PMI rising slightly to 40.1 in December from 39.4 in November, its twelfth month below the 50 mark that separates growth from decline.
While this was the second-weakest reading since the early stages of the pandemic, the pace of decline eased from the five-and-a-half-year low seen a month earlier.
All major parts of the sector shrank. Civil engineering was the weakest area, while housing and commercial construction recorded their sharpest falls since May 2020.
Firms reported fragile client confidence and delayed investment decisions, with uncertainty around last autumn’s Budget continuing to weigh on workloads and order books.
New work continued to fall, extending a run of monthly declines throughout 2025, though the drop was less severe than in November.
Despite this, sentiment improved. More than a third of firms expect output to rise over the next year, the most optimistic reading for five months, helped by hopes of increased utilities and infrastructure spending.
Cost pressures also eased. Lower demand reduced input buying, improved supplier delivery times and slowed construction cost inflation to its weakest pace since late 2024.