April saw a sharp contraction for the construction industry, as highlighted in S&P Global’s latest Purchasing Managers’ Index (PMI) for UK construction
The headline figure in the April 2026 construction PMI is 39.7, a sharp drop from March’s 45.6 and the first time the figure has been below 40 in months.
Any headline figure below 50.0 indicates that the industry is in contraction.
The steepest decline since November 2025
This is also the fourth month in a row that activity has fallen. Civil engineering saw the harshest drop with 35.3, and house building dropped to 38.2.
Commercial construction proved to be more resilient, despite seeing its fastest decline in 2026, it still stayed at 42.7.
Across the industry, new business declined at the fastest pace since November 2025 as increased business uncertainty caused by the conflict in the Middle East caused fewer tender opportunities and sales conversions, as cited by survey respondents.
Input cost inflation grew in April to its highest level since June 2022, with 69% of firms reporting higher input costs as opposed to 48% in the previous month.
Tim Moore, economics director at S&P Global Market Intelligence, said: “A rapid acceleration of input cost inflation was seen across the UK construction sector in April. Aside from the post-pandemic surge in input prices from early-2021 to mid-2022, the latest rise in purchasing costs was the steepest in three decades of data collection.
“Around two-thirds of the survey panel reported higher cost burdens in April, which was overwhelmingly linked to fuel surcharges and subsequent rises in raw material prices. Adding to supply chain challenges, the latest data also indicated longer wait times for the delivery of construction items due to international shipping delays.
“April data again signalled subdued underlying demand conditions, despite construction companies reporting pockets of growth in areas such as energy infrastructure work. A lack of new orders to replace completed projects contributed to the sharpest decline in business activity for five months.
“Expectations for construction activity over the next 12 months remained positive overall during April, but confidence levels were the lowest since last November. Survey respondents cited a growing list of factors weighing on construction sector optimism, including fragile investment sentiment and elevated borrowing costs, alongside continued uncertainty about the impact of the Middle East conflict on prices, supply chains and broader economic prospects.”
The PMI can be found in full here.
“The challenge now is maintaining momentum”
Some industry reactions to the PMI follow:
Paul Atkinson, restructuring advisory partner at FRP, said: “There is mounting pressure on many parts of the sector, particularly housebuilding, where demand remains sensitive to borrowing costs.
“There are still pockets of resilience. Many contractors are continuing to adapt their approach, whether by strengthening supply chains, improving cash management or focusing on more secure pipelines.
“While cost pressures and uncertainty persist, the sector is used to operating in a complex environment. The challenge now is maintaining momentum by making timely decisions on projects, funding and delivery, rather than allowing uncertainty to stall progress. Those that stay proactive and decisive will be best placed to navigate the slowdown and benefit as confidence returns.”
Max Jones, director and head of construction at Lloyds, said: “March’s fall signals that construction continues to face challenges, with rising costs and disruption to supply chains. However, civils and infrastructure are holding up well, supported by longer-term funding and established pipelines across energy networks, water and local transport links.
“Some firms are pressing ahead with delivery and bringing key capabilities in-house to protect supply chains, but conditions remain testing. A reduction in geopolitical uncertainty could improve sector activity over time.”
Lynsay Turnbull, regional director at Egis UK, said: “April’s PMI data reflects another challenging month for the construction sector, with activity declining sharply across all major areas of the industry while cost pressures continue to intensify. Geopolitical uncertainty and persistent inflationary pressures are weighing heavily on confidence, demand and overall project viability.
“Civil engineering remained the weakest-performing sector, while residential activity also saw a notable decline as subdued demand and elevated borrowing costs continue to constrain new development. Commercial construction had demonstrated a degree of resilience in recent months, however, April’s figures suggest uncertainty is now beginning to impact that area of the market more significantly, with fewer opportunities progressing and extended decision-making timelines affecting project pipelines.
“One of the most concerning elements of this month’s data is the sharp rise in input costs, driven by fuel surcharges, shipping disruption and wider supply chain pressures linked to the ongoing conflict in the Middle East. Rising subcontractor costs and longer lead times will place further strain on projects already operating within tight margins.
“These conditions are also continuing to affect staffing levels, with many firms remaining cautious around recruitment as workloads soften. Despite the challenges, there are still some areas of cautious optimism, particularly around long-term infrastructure and energy projects. However, the sector will be looking for greater economic stability and improved market conditions in the months ahead to help restore confidence and support recovery across the industry.”
Richard Green, construction partner at law firm Gowling WLG, said: “The latest S&P Global Construction PMI paints a deteriorating picture for the sector. This reflects a combination of subdued demand, persistently high borrowing costs and client reluctance to commit capital in an uncertain economic environment. Developers are delaying starts, public sector programmes remain slow to progress, and contractors are increasingly cautious about taking on risk without greater price and programme certainty.
“From a commercial perspective, these conditions are feeding directly into tighter cash flow, more robust scrutiny of payment terms and a growing focus on balance sheet resilience. We are seeing earlier engagement on contract risk allocation, value engineering and exit protections, alongside a rise in distress indicators further down the supply chain.
“Until there is clearer visibility on interest rates, planning reform and the public infrastructure pipeline, confidence is likely to remain fragile. In the meantime, the priority for many firms will be preserving liquidity, managing risks proactively and avoiding exposure to unviable projects.”
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