UK construction sector downturn eases in January

(Sharecast News) - The downturn in the UK construction sector eased in January, according to a survey released on Thursday. The S&P Global construction purchasing managers' index rose to 46.4 from December's five-and-half year low of 40.1.

This was still below the 50.0 level that separates contraction from expansion but marked the highest reading since June 2025.

Housebuilding was the weakest-performing segment in January, although the pace of contraction eased to its slowest for three months. Survey respondents cited a lack of new residential development projects and subdued demand conditions.

Civil engineering activity also fell sharply in January, while the fall in commercial work was the slowest since May 2025.

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.

"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. Housebuilding weakness persisted, although even here the rate of decline eased considerably since December and was the least marked for three months.

"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."