Britain’s housebuilding sector has remained mired in its most severe downturn since the start of the Covid pandemic, whilst the broader construction industry has entered a year-long decline, according to new survey findings.
Residential construction, commercial building projects, and civil engineering all continued to shrink dramatically at the close of 2025. The most recent S&P Global UK construction purchasing managers’ index (PMI) recorded a figure of 40.1 in December, rising from 39.4 in November. This remained beneath the neutral 50-point benchmark, signalling that activity has declined for the 12th month in a row. It comes despite Labour’s manifesto pledge to build 1.5 million homes over five years to boost homeownership for first-time buyers “in every community”.
Economist Julian Jessop wrote on X: “Despite the Labour Government’s appeals to ‘build, baby, build!’, the S&P Global UK Construction PMI suggests activity is collapsing. The December index was only just above the post-COVID low hit in November.”
Contraction across the entire sector was less severe than the previous month, which had represented the weakest performance since May 2020.
This improvement was attributed to civil engineering experiencing a marginally smaller decline than in November, though it remained the poorest-performing construction category last month.
As for residential building and commercial projects, the slump in activity was the deepest since the early stages of the COVID pandemic.
Construction firms surveyed reported that client confidence remained brittle, with reduced demand leading to diminished workloads at year’s end.
Many firms also highlighted that their clients were postponing investment choices in anticipation of the autumn budget, consequently impacting workloads.
Tim Moore, economics director at S&P Global Market Intelligence, said: “Despite a lifting of Budget-related uncertainty, delayed spending decisions were still cited as contributing to weak sales pipelines at the close of the year.”
However, he also noted a stronger sense of optimism regarding business activity improvement among firms in the most recent survey. He said: “Some survey respondents attributed greater optimism to projections of rising infrastructure spending, especially in the utilities sector.
“There were also hopes that lower borrowing costs and easing inflationary pressures could boost demand across the construction sector.”
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