The Global UK Construction PMI for March 2026 indicates a further deterioration in industry conditions, as a steep drop in housing activity dampens overall momentum
The PMI data for last month highlights a weak headline figure of 45.6. Although this represents a slight increase from 44.5 previously, it still indicates ongoing contraction across the industry.
A reading of 50.0 or above is required to signal growth. This marks the 15th consecutive month in which the index has remained below that threshold.
PMI result breakdown
In terms of individual sectors, residential is the weakest, with the sharpest decline, followed by commercial and civil engineering, which were supported by infrastructure and energy projects.
New orders saw the steepest drop since November 2025, due to continued client risk aversion, delays to investment decisions, and increasing global uncertainty fuelled by conflicts in Iran and the Strait of Hormuz.
Cost inflation is also still rising, with the fastest acceleration in nearly 30 years driven by the same issues. 48% of firms have reported rising costs.
All of this has led to business optimism plummeting to a 3-month low and growth expectations falling to a low.
The PMI can be read in full here.
“Total new orders decreased at one of the sharpest rates seen over the past six years”
Tim Moore, economics director at S&P Global Market Intelligence, said: “UK construction companies indicated a sustained downturn in business activity during March, led by another steep reduction in residential work. A degree of resilience continued in the commercial and civil engineering segments. There were some reports of a turnaround in infrastructure work, especially in the energy sector.
“March data suggested a challenging near-term outlook for construction activity as total new orders decreased at one of the sharpest rates seen over the past six years. Survey respondents commented on fragile consumer confidence and delayed investment decisions in response to the outbreak of war in the Middle East.
“Construction firms also signalled a recalibration of their output growth forecasts for the year ahead. The drop in confidence during March wiped out the steady improvements in business optimism reported since the Autumn Budget. Escalating inflationary pressures, gloomy domestic economic prospects and higher borrowing costs were widely cited concerns in March.
“International shipping delays meant that supply chain performance deteriorated for the first time since last summer. Moreover, fuel surcharges and rising transport costs contributed to a surge in input cost inflation to its highest for more than three years. The month-on-month acceleration in cost inflation since February was the largest recorded in nearly three decades of data collection.”
Industry comments on the latest construction PMI
Max Jones, director and head of construction at Lloyds, said: “Although the sector faces some continued challenges, the improvement may suggest early signs of momentum. Civils and infrastructure remain areas of relative strength, with firms supported by a wider appetite to provide long-term finance to large-scale projects and contract pipelines across areas including power networks, roads, and rail.
“That said, firms remain cautious and will be focused on balancing resilience and growth to shape investment decisions. The priority will be monitoring supply chains to maintain continuity of services and materials and keeping a close eye on working capital and cash flow so they can manage cost pressures, for example, from energy price inflation.”
Richard Green, construction partner at law firm Gowling WLG, said: “These figures underline the intense pressure the sector is facing from surging cost inflation, with input prices rising at the fastest pace on record while overall activity remains firmly in contraction. Although the headline PMI edged up to 45.6, this still marks the 15th consecutive month of declining output, and weakening new orders suggest demand conditions remain fragile.
“Rising material and energy costs, supply chain disruption and higher borrowing costs are all weighing heavily on confidence, particularly for housebuilders and commercial projects. While there are some signs of resilience in energy and infrastructure work, the near term outlook for construction remains challenging unless inflationary pressures begin to ease and greater certainty returns to the wider economic environment.”
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