December\u2019s 40.1.<\/a><\/p>\nThe threshold for growth in the industry is 50.0, meaning decline is continuing, if significantly slower.<\/p>\n
All major sectors are still contracting<\/h3>\n
With the lowest PMI of 39.3, residential construction is the weakest sector, with weak demand and new housing projects. The rate of decline did reach the lowest in three months, however, indicating the beginning of recovery.<\/p>\n
Civil engineering also fell to 40.6, while commercial construction stayed relatively strong at 48.4. Activity in commercial neared stabilisation, as post-budget and investment clarity was established.<\/p>\n
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.<\/p>\n
“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. House building weakness persisted, although even here the rate of decline eased considerably since December and was the least marked for three months.<\/p>\n
“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.<\/p>\n
“Supply conditions improved again in January. Lead times for the delivery of construction items shortened for the sixth month in a row and subcontractor availability increased at a solid pace. However, margins were under pressure as higher wages and raw material prices led to the sharpest rise in purchasing costs since September 2025.”<\/p>\n
PMI cautiously welcomed by industry<\/h3>\n
Max Jones, director & head of construction at Lloyds, said: \u201cThe modest rise and further momentum will be welcomed by the sector. Despite ongoing challenges, including sticky cost inflation, there are signs that construction firms are optimistic about 2026. Many are focused on upskilling their workforce and investing in apprenticeships, and civil engineering is looking particularly busy as major new investments in water, energy and grid infrastructure get underway.\u201d<\/p>\n
Richard Green, construction partner at Gowling WLG, said: “While activity remains in contraction, this improvement suggests the industry may be moving past the sharpest phase of last year\u2019s downturn.<\/p>\n
\u201cConstruction firms entered the new year after an extended period of weakened demand, delayed client decision making and fragile confidence \u2013 conditions reflected in late 2025 data showing steep declines across housing, commercial and civil engineering activity. However, today\u2019s figures indicate that the rate of decline is beginning to ease, hinting at early stabilisation despite persistent cost pressures and stretched supply chains.<\/p>\n
\u201cLooking ahead, much will depend on how quickly interest rate conditions begin to ease and whether planned infrastructure and housing commitments convert into active project pipelines. For now, the moderation in contraction offers a cautious but welcome signal that confidence may gradually return across the UK construction landscape.\u201d<\/p>\n
\n<\/div>","protected":false},"excerpt":{"rendered":"
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