According to the latest S&P Global Purchasing Managers鈥� Index (PMI), total construction activity levels fell at the steepest pace since May 2020.
Underlying data highlighted marked decreases in volumes of work carried out across all three monitored sub-sectors, but a considerable drag came from a fresh drop in residential building.
The headline PMI was 44.3 in July, down from 48.8 in June; the previous post-covid low was a reading of 44.6 in February 2025. Any score below 50 indicates a decline in activity. The lower the score, the steeper the decline.
July's score was perilously close to June 2019's reading of 43.1, which 鈥� the pandemic aside 鈥� remains a 15-year low.
Respondents blamed site delays, lower volumes of incoming new business and weaker customer confidence for July鈥檚 poor showing.
Some respondents also cited a reduction in public sector work, with civil engineering seeing the sharpest drop during July. There was a renewed decline in residential building activity while commercial construction declined more gently.
The volume of new incoming work declined for a seventh month running in July, according to this survey, with the pace of contraction at its most pronounced since February. A drop in tender opportunities was cited.
Looking ahead to the next 12 months, surveyed companies were optimistic of growth in activity, on balance, but expectations were weak when compared with their long-run trend. This was despite business confidence ticking up slightly from June's two-and-a-half-year low. Concerns surrounding the broader economic outlook weighed on company growth projections.
The downward trend in payroll numbers continued into July, extending the current period of falling employment to seven months. Lay-offs, recruitment freezes and the non-replacement of leavers were seen in panellists' anecdotal replies to the questionnaire.
UK constructors also pared back their usage of subcontractors, but their rates charged nevertheless rose at a sharp pace, in line with the trend seen since late last year.
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Joe Hayes, principal economist at S&P Global Market Intelligence, said: "Having trended upwards in recent months, our survey data for July signal a fresh setback for the UK construction sector, with total industry activity falling at the sharpest rate since May 2020. Dissecting the latest contraction, we can see a fresh and sharp drop in residential building, as well as an accelerated fall in work carried out on civil engineering projects.
"Forward-looking indicators from the survey imply that UK constructors are preparing for challenging times ahead. They're buying less materials and reducing the number of workers on the payroll. Expectations also continue to underwhelm, despite a modest pick-up in confidence from June's two-and-a-half-year low.
"Anecdotally, companies reported a lack of tender opportunities and a hesitancy from customers to commit to projects. Broader themes of uncertainty, both domestically but also internationally, will do little to reignite investment appetites."
Gareth Belsham, director of Bloom Building Consultancy, commented: 鈥淭here鈥檚 no sugarcoating it - this data will be tough to swallow for almost everyone in construction.
鈥淎ll three subsectors of the industry saw output contract in July, with the sharpest fall coming in civil engineering. House-building, the sector beloved of politicians in need of a photo opp, also declined badly.
鈥淭o make matters worse, the pipeline of new work is drying up fast. New order numbers have now fallen for seven months in a row, with July鈥檚 slump the worst seen since February. Little wonder contractor confidence is weak and many construction firms are laying off payrolled staff.
鈥淛une saw sentiment plunge to its lowest level since December 2022, and while July鈥檚 figure improved marginally, even the most optimistic of builders will find it hard to see the glass as half full.
鈥淭omorrow the Bank of England is widely expected to cut its base rate for the third time this year, and the prospect of cheaper finance will be welcomed by developers who are struggling to square their finance costs with weak demand for their end product.
鈥淭he one bright spot is commercial sector construction. While it too saw output fall in July, at least more commercial schemes are being greenlit. Those that do are laser-focused on value and have a fully costed business case 鈥� there is minimal margin for error.鈥�
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