Sector downturn deepens despite government's housebuilding ambitions
The UK construction industry cut jobs for the 18th consecutive month in June, according to the latest S&P Global Purchasing Managers' Index (PMI), as housebuilding and new home sales continued to weaken.
The survey recorded another round of what it called "sustained job shedding" across the sector. Firms also reported a faster rise in the availability of subcontractors, with the increase in independent contractor supply the quickest since April 2025.
The headline PMI reading came in at 38.4 for June, a slight improvement on May's six-year low of 38.2. Any reading below 50.0 signals contraction, meaning the sector has now been shrinking for over a year and a half.
Source: S&P Global PMI
"The downturn in UK construction output lost some intensity in June amid a softer reduction in commercial building work," said Tim Moore (pictured right), economics director at S&P Global Market Intelligence. "House building and civil engineering activity nonetheless registered sharper declines than in May, with the latter seeing its weakest performance since the start of the pandemic.
"New work decreased to the least marked extent since March, despite widespread reports of challenging market conditions. Construction companies commented on headwinds from subdued housing sales, elevated interest rates and squeezed consumer finances, alongside cutbacks to business investment plans."
Residential construction was the weakest-performing area of the sector, with a sub-index reading of 35.6 — its steepest monthly decline so far in 2026.
"Anecdotal evidence cited factors such as fewer new build house sales, weak business investment spending, and intense competition for new orders," the report said.
Survey respondents also pointed to heightened business uncertainty and "delayed project starts" as contributing factors.
The figures come as Prime Minister-in-waiting Andy Burnham has signalled plans for what he has described as the "biggest council house building program since the post-war period," which he says would deliver "higher density residential development" in towns across England.
Labour's 2024 manifesto committed the party to building 1.5 million homes in England by the end of the decade. That pledge has faced criticism from both industry bodies and opposition politicians over its feasibility. The Home Builders Federation wrote to the Office for Budget Responsibility last year warning that the target was at risk of being missed.
Housebuilders have said the goal will remain "extremely ambitious" unless the government takes further action to improve affordability and reduce the tax burden on developers.
The PMI report identified additional cost pressures from recent policy changes, including the landfill tax and the building safety levy, both of which have added to construction costs. Elevated interest rates were also cited as a factor behind reduced housing market activity and fewer new project starts.
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