The news will be another blow for contractors still reeling from government plans to scrap road schemes to pay for increased defence spending.

The latest bellwether S&P Global UK Construction Purchasing Managers’ Index registered 38.4 in June, up slightly from May’s six-year low of 38.2 but still well below the neutral 50.0 value.

Construction output has decreased in each month since January 2025 and the latest fall was the second- fastest since the start of the pandemic.

Commercial construction was the best-performing category and showed some resilience in June (index at 41.5). It was also the only segment to record a slower downturn in activity than
in the previous month.

House building activity (index at 35.9) decreased at the sharpest pace in 2026 to date while civil engineering activity fell to the greatest extent since April 2020 (index at 22.1).

On the positive side Twice as many construction companies (38%) expect an increase in business activity over the year ahead as those that predict a decline (19%).

This pointed to a marked rebound in business optimism from the six-month low seen in May.

But confidence remained much weaker than the long-tun survey average. Positivity was often linked to forthcoming public sector projects and greater infrastructure spending, alongside the restart of delayed projects.

Tim Moore, Economics Director at S&P Global Market Intelligence, said: “The downturn in UK construction output lost some intensity in June amid a softer reduction in commercial building work. House building and civil engineering activity nonetheless registered sharper declines than in May, with the latter seeing its weakest performance since the start of the pandemic.

“New work decreased to the least marked extent since March, despite widespread reports of challenging market conditions. Construction companies commented on headwinds from subdued housing sales, elevated interest rates and squeezed consumer finances, alongside cutbacks to business investment plans. Some firms noted delays with infrastructure work and fewer public sector tender opportunities, but energy markets were cited as an area of positivity.

“Supply chain challenges appear to have receded, with vendor delivery times lengthening to the smallest degree since March. Construction companies also reported a slowdown in input price inflation from the near four-year peak seen in May.

“June data indicated a recovery in business activity expectations across the construction sector since May, although confidence levels remain well short of historic trends. A number of survey respondents suggested recent new contract awards and an expected improvement in broader market conditions had underpinned optimism.”