UK construction sector extends longest slump since 2008

The construction sector in the United Kingdom has recorded its 14th consecutive month of contraction, marking the longest period of decline since the global financial crisis. According to the latest data from S&P Global Inc., the Construction Purchasing Managers Index (PMI) dropped to 44.5 in February, down from 46.4 in January. This figure remains significantly below the 50.0 threshold that separates industry growth from contraction, missing economist expectations of 47.0. Tim Moore, economics director at S&P Global Market Intelligence, noted that the downturn intensified during the month. > "Februarys decline was faster than seen on average since the run of sub-50 readings started in January 2025." The primary driver of this sustained weakness is a sharp downturn in residential building. The house building subindex fell to 37.0 in February, its eighth straight month of decline. Moore highlighted the specific impact of the housing market on the broader sector. > "A sharper downturn in house building was the main factor behind the setback for UK construction activity in February, following some signs of stabilisation at the start of 2026." Beyond the residential segment, both commercial and civil engineering activities also experienced declines. Several factors contributed to the shrinking order books, including sluggish market conditions, exceptionally wet weather that stalled active projects, and the most significant rise in cost pressures since mid-2025. Despite these challenges, there was a notable increase in business optimism, which reached its highest point in 14 months. However, the current slump presents a significant hurdle for the government under Prime Minister Keir Starmer, which has set an ambitious target to build 1.5 million homes during its five-year term. This level of construction has not been achieved since the 1970s. The ongoing struggle in construction, which represented over 6% of the British economic output in 2025, stands in contrast to the more resilient services sector. The all-sector PMI, which incorporates manufacturing and services, remained in expansionary territory at 52.9 in February, only slightly lower than the 53.1 recorded in January.