Housing and civils hit hard as construction activity plummets  

The UK construction sector experienced a sharp downturn in February, with the lowest activity level since May 2020, according to the latest S&P Global UK Construction Purchasing Managers’ Index (PMI) data. The sector experienced a decline in housing and civil engineering activity, with residential construction being the weakest-performing sector.

The main factors behind the slump were weak demand, elevated borrowing costs, and a lack of new work to replace completed projects. Civil engineering output also suffered a severe decline, with the level since October 2020. New orders fell at their fastest monthly rate since May 2020, with delayed decision-making among clients and concerns about the economic outlook.

Construction firms also reduced staffing levels for the second consecutive month and the fastest rate since November 2020. Cost inflation accelerated in February, reaching its highest level since March 2023.

Despite the bleak headline data, almost 40% of surveyed firms expected an upturn in output in the year ahead. Industry analysts reacted with concern, but some reasons for optimism remain. The construction sector is experiencing the impact of intensifying inflation, macroeconomic uncertainty, and the high cost of finance.

The UK construction sector has experienced a significant downturn, with both housing and civil engineering activities facing notable declines. In February 2025, the S&P Global/CIPS UK.

Construction Purchasing Managers’ Index (PMI) dropped to 44.6 from January’s 48.1, marking its lowest point since May 2020. A PMI reading below 50 indicates contraction, underscoring the severity of the current downturn.

Residential Construction: Sharp Decline

The residential construction sector has been particularly affected, experiencing one of its steepest declines since 2009, excluding the pandemic period. The housebuilding index plummeted to 39.3 in February from 44.9 in January. This sharp decrease.

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Attributed to weak demand, elevated borrowing costs, and subdued consumer confidence, leading to a reduction in new projects and a slowdown in housing activity. Several factors have contributed to the downturn in both housing and civil engineering sectors:

Civil Engineering: Significant Contraction

Civil engineering activity has also faced a substantial downturn. The sector’s index fell to 45.7, down from 52.4, indicating a marked decline in infrastructure projects. This reduction reflects a broader trend of decreased investment in public infrastructure, contributing to the overall contraction in construction activity.

The simultaneous decline in housing and civil engineering activities poses significant challenges for the UK’s construction industry. The reduction in new orders and accelerated job-shedding indicate a challenging environment ahead. To mitigate these challenges.

In conclusion, the UK construction sector is facing a notable downturn, with both housing and civil engineering activities experiencing significant declines. Addressing the underlying factors contributing to this contraction will be crucial for the sector’s recovery and long-term sustainability.

Residential Construction: Sharp Decline

Civil engineering activity has also faced a substantial downturn. The sector’s index fell to 45.7, down from 52.4, indicating a marked decline in infrastructure projects. This reduction reflects a broader trend of decreased investment in public infrastructure, contributing to the overall contraction in construction activity.

• Elevated Borrowing Costs: Higher interest rates have increased financing costs for both consumers and developers, leading to reduced investment in new projects.
• Weak Demand: Economic uncertainties and subdued consumer confidence have dampened demand for new housing and infrastructure projects.

With demand deteriorating, construction firms also reduced staffing levels for the second consecutive month and the fastest rate since November 2020. Combined with the updated National Policy Framework, this “offers some hope on the horizon” to accelerate the construction of new infrastructure and homes, he added.

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