Construction activity downturn eases in July – S&P Global

This represented the strongest level of optimism since February.

Tim Moore, economics director at S&P Global Market Intelligence, said: “July data suggests that the performance of UK construction sector has started to stabilise after a sharp downturn throughout the second quarter of 2026.

“Business activity levels continued to decline in all three main categories, but in each case the rate of contraction was much slower than in June.

“This was supported by the weakest reduction in new business intakes since September 2025.

“Survey respondents commented on signs of a turnaround in client demand and a revival in new tender opportunities in some cases, despite subdued underlying market conditions. This contributed to more upbeat business activity expectations for the year ahead, with confidence levels the highest since February.”

He added: “A renewed improvement in supplier performance and softer input cost inflation were also positive developments in July.

“Construction companies widely commented on fuel surcharges and higher raw material prices due to the war in the Middle East, but the overall rate of cost inflation was the lowest for five months.”

Reaction:

Maria Harris, chair of the OPDA:

“While the construction PMI provides an important measure of the health of the housebuilding sector, it’s also a reminder that increasing the supply of homes is only part of the solution. We also need to ensure people can buy and sell those homes more quickly, confidently and with fewer unnecessary delays.

Too many transactions still take months to complete, with buyers and sellers facing uncertainty at every stage. That not only creates stress and increases the risk of sales falling through, it also reduces confidence across the entire housing market. Developers are less willing to build if transactions are slow and unpredictable, while buyers become more cautious if they fear delays or unexpected costs.

Modernising the homebuying process through better upfront information, greater use of digital data and a more transparent transaction process would help improve certainty for everyone involved. If we want a housing market that supports growth, mobility and new housing supply, we need to look beyond how many homes we build and focus on how efficiently they move through the system.”

Richard Pike, sales and marketing director at Phoebus Software:

“There are some positive signs in the latest UK construction PMI that the downturn is starting to stabilise with output at its highest levels for four months. However, the sector remains in contraction, with housebuilding continuing to underperform the wider construction sector.

Unfortunately, deep structural issues in the property market remain. Affordability pressures and economic uncertainty mean many prospective buyers are delaying moves. Developers, in turn, are reluctant to bring forward new sites when demand remains uncertain. The result is constrained housing supply, which helps keep prices elevated and limits any meaningful improvement in affordability. It’s a self-perpetuating cycle. Buyers are waiting for confidence to return, while developers are waiting for buyers to return.

“Breaking that deadlock requires stable economic conditions, a clear and consistent housing strategy, planning reform and a more efficient homebuying process. This will give buyers, lenders, and developers the certainty they need to invest and transact with confidence.

“Until confidence returns across the housing market, construction activity is likely to remain subdued, and any recovery is likely to be very slow and gradual.”