UK construction activity fell for the 11th consecutive month in November, with the latest S&P Global purchasing managers’ index (PMI) reading dropping to 39.4 from 44.1 in October. Any score below 50 signals contraction, and November’s figure was the weakest since May 2020, when Covid restrictions halted most housebuilding and shut many sites.
The prolonged slide means the current downturn is now the longest since the 2008 financial crisis, based on the survey data. However, separate official figures from the Office for National Statistics, published in August, indicated that construction output grew by 1.2 per cent between April and June, underlining a divergence between sentiment-led survey data and recorded output.
According to S&P Global, new orders in November fell at the sharpest rate since May 2020, with 44 per cent of firms reporting a decline and just 17 per cent seeing an increase. The firm attributed the drop to weak client confidence and delayed investment decisions ahead of the Autumn Budget.
All main sectors saw steep falls in activity, with housing (index 35.4), civil engineering (30.0) and commercial construction (43.8) each recording their fastest downturn in five-and-a-half years. November also marked the fastest non-pandemic decline in total new business since early 2009, pointing to a thin pipeline heading into 2026.
Employment levels fell for the 11th month in a row as contractors struggled to replace completed work and faced sustained wage pressures. Aecom head of cost management Brian Smith said firms “could be forgiven for not displaying any festive cheer”, but noted that government commitments to protect capital spending and support planning reform were positive signals, provided they translate into visible progress.
Smith highlighted the chancellor’s pledge to fund 350 additional planners as a tangible step that could unlock schemes, especially if combined with greater use of AI and digital tools to accelerate planning decisions. He argued that seeing reforms “in action” would be key to rebuilding contractor confidence in 2026.
MHA’s head of real estate and construction, Atul Kariya, said the Budget offered limited grounds for “cautious optimism” but warned that core market conditions remain challenging. He cited rising labour costs, persistent planning delays, global economic headwinds and the potential impact of a mansion tax as ongoing drags on demand and project viability.
Kariya added that the minimum wage increase, the Renters Reform Bill and higher taxes on private landlords would add further pressure to the sector. He stressed that construction companies, investors and lenders plan on a three- to five-year horizon, and warned that single-Budget policy shifts can “recalibrate the economics of a project overnight,” reinforcing the industry’s call for stability and predictability in government policy.
