Delayed decision-making on new projects and a generally subdued pipeline of major infrastructure work was blamed for the fastest rate of contraction since October 2020.

Civil engineering led the downturn in activity with the bellwether S&P Global UK Construction Purchasing Managers’ Index posting 46.4 in March, up from a 57-month low of 44.6 in February but still well below the neutral 50.0 threshold.

Lower volumes of construction output have now been recorded for three consecutive months and the latest reading indicated a solid pace of contraction.

Civil engineering (index at 38.8) was the weakest-performing area of activity in March.

Residential construction activity declined at a slower pace than in February, but the respective seasonally adjusted index was still well inside negative territory (44.7).

Commercial building (47.4) deceased only moderately in March but the rate of contraction was the fastest since January 2021.

Sluggish demand conditions contributed to another marked deterioration in construction order books.

Lower levels of incoming new work have been recorded throughout 2025 to date as construction companies often noted a lack of sales enquiries and greater competition for new work.

Confidence across the construction sector also slipped to its lowest since October 2023.

Tim Moore, Economics Director at S&P Global Market Intelligence, said: “March data highlighted a challenging month for UK construction companies as sharply reduced order volumes continued to weigh on overall workloads.

“Civil engineering experienced the biggest setback as activity decreased to the greatest extent since October 2020. Survey respondents commented on subdued sales pipelines and a subsequent lack of infrastructure work to replace completed projects.

“Commercial work also saw a headwind from delayed decision-making on major projects, largely due to worries about the impact of rising global economic uncertainty. The downturn in residential construction activity nonetheless eased since February, providing a source of encouragement despite ongoing reports of sluggish demand conditions.

“Construction companies remained cautious about their year ahead growth prospects, as fewer sales conversions and a third successive monthly reduction in total new work hit confidence levels. Overall business optimism slipped to its lowest since October 2023.

“A lack of new projects, alongside pressure on margins from rising payroll costs, led to hiring freezes and the non-replacement of departing staff in March. The net result was the fastest pace of job shedding across the construction sector for nearly four-and-a-half years.”