UK construction sector downturn eases in January
By Michele Maatouk
Date: Thursday 05 Feb 2026
(Sharecast News) - The downturn in the UK construction sector eased in January, according to a survey released on Thursday.
The S&P Global construction purchasing managers' index rose to 46.4 from December's five-and-half year low of 40.1.
This was still below the 50.0 level that separates contraction from expansion but marked the highest reading since June 2025.
Housebuilding was the weakest-performing segment in January, although the pace of contraction eased to its slowest for three months. Survey respondents cited a lack of new residential development projects and subdued demand conditions.
Civil engineering activity also fell sharply in January, while the fall in commercial work was the slowest since May 2025.
Tim Moore, economics director at S&P Global Market Intelligence, said: "January data provided encouraging signs that the UK construction sector has exited its tailspin, and firms are becoming more hopeful that new projects will get back on track in 2026.
"The latest reduction in total industry activity was the slowest since last June. Commercial work outperformed, with activity moving close to stabilisation amid a post-Budget boost to contract awards. Housebuilding weakness persisted, although even here the rate of decline eased considerably since December and was the least marked for three months.
"Construction companies noted subdued underlying demand due to fragile client confidence and elevated risk aversion, but there were some reports of improving investment sentiment and greater sales enquiries at the start of the year. As a result, business activity expectations rebounded to an eight-month high, while the pace of job losses moderated."
Matt Swannell, chief economic advisor to the EY Item Club, said: "It's been our long-held view that the weakness in the construction PMI paints an overly pessimistic picture of the sector. Over the last year or so, the PMI has consistently been in contractionary territory, but official estimates of construction activity have pointed to a sector that has moved sideways. The PMI's gloominess appears to reflect sentiment in the construction industry, rather than an actual shift in activity.
"This year is expected to be one of mixed fortunes for the construction sector. Planning reforms and public infrastructure projects will offer a healthy pipeline of new work. But persistent geopolitical uncertainty will likely cause the delay or cancellation of some large projects as global volatility prompts businesses to pause spending. A shortage of skills within the sector will also continue to reduce the viability of some new construction projects as businesses continue to face elevated labour costs."
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