Fewer new UK homes coming as construction activity hits six-year low
Key Points
- UK construction output fell at its fastest pace for six years in May 2026, with the headline PMI at 38.2, down from 39.7 in April.
- Residential building was the weakest segment at 36.0, which S&P Global linked to unfavourable market conditions and elevated borrowing costs.
- New orders dropped at the fastest rate for six years on project delays, deferred investment and tighter client budgets.
- Input price inflation hit its fastest since June 2022, driven by fuel surcharges, energy costs and transport bills.
- Forthcoming energy sector and power network projects were reported as a bright spot for new infrastructure work.
UK construction output fell at its fastest pace for six years in May 2026, with housebuilding the weakest-performing part of the sector, according to data from S&P Global.
The headline seasonally adjusted S&P Global UK Construction Purchasing Managers’ Index posted 38.2 in May, down from 39.7 in April.
The reading sat below the neutral 50.0 mark for the seventeenth month running, and the rate of contraction was the steepest since May 2020. S&P Global said that, aside from the drop in output at the start of the pandemic, the latest fall was the fastest since March 2009.
Residential activity recorded the weakest reading of the three broad construction categories, with its index at 36.0. S&P Global said survey respondents linked the slowdown to unfavourable market conditions and headwinds from elevated borrowing costs.
Commercial construction registered 39.0, with the firm reporting a steeper reduction in output as clients held back in response to geopolitical tensions and rising inflationary pressures. Civil engineering activity stood at 36.2, falling at a slightly less marked rate than in April.
Total new orders across the sector decreased at a sharp and accelerated pace in May, with the downturn in new business the fastest for six years.
S&P Global said construction companies pointed to project delays, deferred investment decisions and cutbacks to client budgets as reasons for fewer tender opportunities, and that some firms cited domestic political uncertainty as a further drag on demand.
The firm added that forthcoming energy sector and power network projects were reported as a bright spot for new infrastructure work.
Tim Moore, Economics Director at S&P Global Market Intelligence, said UK construction companies reported a steep downturn in business activity during May, with the speed of contraction accelerating to its fastest for six years.
Moore said house building remained especially subdued, and that there were fresh challenges from a considerable softening of commercial activity since April.
Higher energy, fuel and transportation costs led to the fastest pace of input price inflation since June 2022. S&P Global said almost two-thirds of the survey panel signalled a rise in input prices during May, while only 1% reported a decline.
The firm linked the higher purchasing prices mostly to fuel surcharges, rising energy costs and higher transportation bills, and said subcontractor charges increased to the greatest extent for nearly three-and-a-half years.
Suppliers’ delivery times lengthened for the third month running in May. S&P Global said the downturn in vendor performance was the sharpest since December 2022, amid widespread reports of international shipping delays and some raw material shortages.
Business activity expectations for the next 12 months remained positive in May, but S&P Global said the degree of optimism eased to the second-lowest since December 2022.
The firm said around 31% of the survey panel predict a rise in output levels during the year ahead, while 25% forecast a reduction. Moore said concerns about a prolonged decline in construction order books, alongside unfavourable near-term UK economic prospects, weighed on business optimism in May.
The data were collected between 12 and 28 May 2026.
