Delayed spending and Budget uncertainty sees output fall again as 2025 decline drags on

Construction output maintained its longest period of continuous decline since the global financial crisis in 2008 with brittle confidence, delayed spending decisions and Budget uncertainty being blamed for another sharp fall.

Output fell for the eleventh month in a row in November, the bellwether S&P Global UK Construction Purchasing Managers’ Index has revealed.

It said last month’s figure was 39.4, down from 44.1 recorded in September, making it the sharpest rate of decline since May 2020.

Civil engineering was the weakest performing sector with a score of 30, down from 35.4, while residential also continued to suffer, falling to 35.4 from 43.6. The previous one bright spot, commercial, fell to 43.8 from 46.3.

The survey said that the three sectors’ falls were the fastest downturns since May 2020.

Tim Moore, economics director at S&P Global Market Intelligence, said: “November data revealed a sharp retrenchment across the UK construction sector as weak client confidence and a shortfall of new project starts again weighed on activity.”

He added: “The degree of optimism dropped to its lowest since December 2022 amid reports of cutbacks to client budgets and pervasive worries about long-term UK economic growth prospects.”

Julie Palmer, managing partner at restructuring specialist Begbies Traynor, said the delayed Budget had also had a impact on the numbers.

She added: “It is no wonder November has seen the steepest decline since the pandemic given demolishing of confidence in the sector and the subsequent downing of tools as the UK held its breath in the run up to the Budget.

“And whilst some announcements and planning developments will be positive, their true impact will still take a while to be felt.”

Aecom’s head of cost management Brian Smith said: “The government has made all the right noises by protecting capital spending and backing planning reform. However, clients need to see further progress before committing to new projects.”

But some said there were grounds for optimism in the new year. Jordan Smith, regional director at consultant Thomas & Adamson, said: “There remains a belief that lower borrowing costs, alongside targeted public-sector investment, could help turn sentiment around. The sector has weathered prolonged periods of uncertainty before, and with clear policy direction and consistent support, it is well placed to recover once the market conditions begin to settle.”

And Max Jones, director of infrastructure and construction at Lloyds, said: “The construction sector is entering 2026 with more clarity over long-term infrastructure opportunities.”