UK Construction Sector Faces Longest Contraction Since Financial Crisis
UK construction output contracted for the 12th consecutive month in December 2025, marking the longest downturn since the 2007-09 financial crisis. Despite the current challenges, firms remain hopeful for 2026 due to expected lower borrowing costs and reduced budget uncertainty.
Insights:
The UK construction sector has entered its longest period of contraction since the 2007-09 financial crisis, with output declining for the 12th consecutive month in December 2025. The S&P Global/CIPS Purchasing Managers' Index (PMI) for December came in at 40.1, significantly below the median forecast of 42.5 and well beneath the 50.0 threshold that separates growth from contraction. This marks a continuation of the sector's struggles, as November's PMI was recorded at 39.4, a 5.5-year low.
The downturn is particularly pronounced in residential building, where the activity subindex plummeted to 33.5, the weakest level observed since the COVID-19 lockdowns in May 2020. The commercial sector also faced a sharp decline, with output falling at its steepest rate in over five years. Civil engineering, although slightly improved, remains the weakest performing category.
