The UK construction sector remained in contraction in July, though the pace of decline slowed to a four-month low. The S&P Global Purchasing Managers' Index rose to 44.7 from June's 38.4, marking the highest reading since March.
Despite the rebound, the index remains below the 50-point threshold that separates contraction from expansion. The sector has now posted uninterrupted declines since January 2025, notching its longest downturn since the global financial crisis.
All major segments showed improvement. Commercial construction led with 46.8, while housing contracted at its slowest pace since October 2025 at 41.8. Civil engineering remained the weakest link at 38.3.
Firms reported the smallest decline in new orders in 10 months, supported by a pickup in tenders for commercial development and transport infrastructure. Staffing cuts also moderated to February levels, though hiring remained muted.
Inflationary pressures eased as purchasing costs rose at their slowest pace in five months, supported by softer demand for materials and improved logistics. This bolstered market sentiment, with 38% of companies now expecting activity to pick up over the next year, the most optimistic reading since February.
