Housebuilding seeing its deepest slump since the early Covid pandemic
UK housebuilding activity has continued its most severe downturn since the onset of the Covid pandemic, with the broader construction sector marking a year of contraction, according to new survey data. Housing, commercial construction and civil engineering all saw sharp contractions as 2025 drew to a close.
The latest S&P Global UK construction purchasing managers’ index (PMI) recorded a score of 40.1 in December, a slight uptick from November’s 39.4. However, this was still below the neutral 50-point mark, signifying a 12th consecutive month of contraction.
Despite this, the overall sector’s decline slowed compared to the previous month, which had seen the lowest level since May 2020. This was attributed to a slightly less pronounced contraction in civil engineering, although it remained the weakest-performing construction category last month.
Meanwhile, the slump in housebuilding and commercial work reached levels not seen since the early days of the Covid pandemic. Surveyed builders reported fragile client confidence and reduced demand leading to smaller end-of-year workloads.
Many companies also noted clients postponing investment decisions ahead of the autumn budget, thereby 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, Mr Moore also highlighted a heightened sense of optimism amongst firms regarding future business activity improvements in the most recent survey.
“Some survey respondents attributed greater optimism to projections of rising infrastructure spending, especially in the utilities sector,” he said.
“There were also hopes that lower borrowing costs and easing inflationary pressures could boost demand across the construction sector.”
