The UK construction industry activity has declined for the 15th consecutive month, with the residential market remaining sluggish.

Investing.com - S&P Global data released on Wednesday showed that UK construction output fell sharply in March, marking the 15th consecutive month of contraction.

S&P Global’s UK Construction Purchasing Managers’ Index rose from 44.5 in February to 45.6 in March, but it remained below the 50.0 threshold that separates growth from contraction. The data was collected from March 12 to March 30.

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Residential construction remained the weakest segment, with an activity index of 38.2. The civil engineering index was 44.8, while the commercial construction index was 47.1. Compared with February, the decline rates for all three categories slowed.

New orders fell at the fastest pace in four months. Construction firms attributed the drop to rising risk-aversion among customers as global economic uncertainty increased. Many companies pointed to the negative impact of the Middle East conflict on customer confidence.

Employment in the sector fell at a faster pace in March. Companies also reported that, in response to reduced workloads, subcontractor usage and procurement activity were cut significantly.

Input cost inflation accelerated rapidly, reaching the highest level since November 2022. Nearly half of the surveyed companies reported higher cost burdens, attributed to the effects of the Middle East war on fuel, transportation, and raw material prices.

Tim Moore, Economic Intelligence Director at S&P Global Market Intelligence, said: “UK construction companies showed sustained weakness in business activity in March, mainly due to a further significant reduction in residential projects.”

Supply chain performance worsened for the first time since July 2025. Suppliers’ average lead times extended to the greatest extent in 14 months, with companies reporting that international shipping times increased and that some raw material supplies tightened.

Business optimism in commercial construction fell sharply in March, to the lowest level in three months. Companies expressed concerns about inflation, higher borrowing costs, and the prospect that the Middle East war could persist.

Some companies reported that demand in the energy sector remained resilient, and noted that improving weather conditions helped ease the overall downward trend after delays caused by unusually wet weather in February.

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