A growth in output of just 0.3% in the three months to June 2026 is the headline figure
Although the ONS construction stats show a minor growth, it is also higher than the previous quarter.
New work grew by 0.4% in the three-month period, and repair and maintenance grew by 0.2%.
Output fell month-on-month
Output fell at the start of April by 0.8%, and 0.1% in both May and June. However, the fall in April is attributed to the fact that March was particularly strong.
In June, new work fell by 0.3%, and repair and maintenance did not move at 0.0%.
In the whole of the three month period, total construction new orders dropped by 11.8%, equivalent to £1.232m when compared to the previous quarter due to drops in both private commercial new work and public other new works.
In the 12 months to June 2026, the annual rate of construction output price growth hit 1.9%.
The stats can be read in full here.
Industry reactions are pessimistic and frustrated
Richard Cook, head of economics at Pegasus Group, said: “Construction has been sorely in need of some good news, and the decrease in today’s construction output data further compounds the pessimistic outlook. The sector has struggled to maintain momentum with a series of fits and starts in recent months: any gains are often followed by decreases, and the construction sector seems to be treading water at a time when development needs to be a key driver in pushing forward a stagnant economy.
“The economy is still feeling the effects of the Middle East, placing an additional burden on a construction sector already grappling with high costs and skills shortages. Yet for all the measures we’ve seen from a succession of governments, it’s not clear these issues have abated.
“Andy Burnham has staked his claim to remedy construction’s skills shortages, valuing the ‘the hard hat as much as the graduation cap’ by enabling earlier access to technical education and skills placements. But construction is still often misperceived as low skill and low pay when it is quite the opposite. And despite targets to introduce 60,000 more construction workers by 2029, the National Audit Office reported that only 74 young people started foundation level construction apprenticeships in 2025-26, against a DWP estimated need of 1,000.
“Perhaps rather surprisingly given the backdrop, the UK economy is proving to be remarkably resilient and compared to some of our neighbours in the G7, we are enduring the effects of global instability relatively well. Unemployment may be at almost 5% in the UK, but it is over 8% in France, where economic growth is sluggish at best. At some point though, we will need to see clear economic progress under the Labour government.
“There is room for optimism however – the government’s long-awaited revised NPPF is imminently expected, and should be instrumental in speeding up the planning process and boosting delivery. A target of 1.5 million homes seems to be ebbing further away from being achievable, but if we start seeing an uptick in delivery, the UK economy will reap the benefits too.”
Neil Leitch, managing director of development finance at Hampshire Trust Bank, said: “A new government might be seen as a chance for a reset, for some fresh ideas to give housebuilding the shot in the arm these figures show that it so clearly needs. But we’ve seen plenty of these moments before. There has been no shortage of initiatives, announcements and reforms, yet the conditions developers are working in have changed far more slowly than the policy surrounding them.
“A recent report from Savills found that housebuilding in England was at its highest when planning policy was stable, following the introduction of the National Planning Policy Framework in 2012. I don’t think that’s a coincidence. Developers can usually work around delay. What they find much harder is planning around uncertainty. If you can’t price the planning risk with any confidence, it’s very difficult to justify tying capital up for two or three years. That’s when perfectly viable schemes quietly fall away long before they ever show up in the housing statistics.
“What I’m seeing is developers becoming much more selective about where they deploy capital. They’re prioritising projects where the planning route is clearer and delivery is more predictable, not because demand has disappeared, but because the commercial margin for error has become too small.
“Demand for new homes is not the issue. The challenge is creating the confidence and certainty that allow viable schemes to move from planning into delivery. Get the planning system right, get the resourcing right, and then leave it alone. Developers know how to build homes.”
Matthew Cook, managing partner at Goodman Jones, said: “The construction sector has shown remarkable resilience over the past year, particularly against other areas of the economy, fuelled by large infrastructure projects and a fair amount of investment into London, largely from the US. Many businesses have maintained healthy activity despite inflationary pressures, higher borrowing costs and wider uncertainty. However, these challenges are now feeding through into trading conditions, reducing output.
“The recent administration of some high-profile contractors has understandably created concern across the market, while conditions in the property sector remain particularly challenging. Developers face high build costs, squeezed margins and a subdued housing market, as consumers feel wider economic pressures. Ongoing uncertainty around government policy is also making it harder for businesses to commit to long-term investment.
“These administrations have increased scrutiny of company financials, making it more important than ever for businesses to understand how they’re perceived by prospects, customers, credit insurers and suppliers. Much of our work involves talking through year-end accounts with finance teams, so they’re well prepared and can offer real reassurance around financial stability.
“Managing risk also means having strong controls to monitor contract performance regularly, so issues are caught early and dealt with before they escalate.
“Whilst pockets of resilience remain for well-managed firms, many are becoming more cautious, focused on cash flow and securing visibility of work ahead. The outlook is hard to call. We’re seeing signs of significant investment into the UK as a comparatively safe market, but government needs to step up and support the wider economy for this sector to properly recover and thrive.”
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