UK construction activity declined for the fifteenth consecutive month in March 2026, but at a slower pace than in February, according to the latest S&P Global UK Construction Purchasing Managers’ Index (PMI).
The PMI, which surveys around 150 construction firms to track changes in business activity, registered 45.6 in March, up from 44.5 in February.
While a reading below 50 indicates contraction, the upward movement suggests a gradual easing of the slowdown.
Mixed Sector Performance as Civil Engineering Shows Resilience
Total new business fell at the fastest rate in four months in March, with respondents noting that geopolitical uncertainty in the Middle East was affecting client confidence and costs. Rising fuel, transportation, and raw material prices also added pressure on margins.
At a sector level, residential, civil engineering, and commercial activity all declined, but at slower rates than in February.
Housebuilding remained the most affected segment, while civil engineering experienced the least marked fall since May 2025, reflecting a gradual rebound in major infrastructure projects. Some respondents also noted that the return to typical weather conditions helped offset some of the slowdown.
BCIS Perspective on Market Conditions
Dr David Crosthwaite, Chief Economist at BCIS, highlighted that the latest PMI figures were broadly in line with expectations: “A continued contraction in construction activity was to be expected from the latest PMI. We’re almost six weeks into the US–Iran conflict, and it is likely that the implications for costs and confidence will take time to ease.
“The brokering of a conditional, two-week ceasefire between the US and Iran, which includes the reopening of the Strait of Hormuz, is a positive development.
“However, given the volatility of the conflict so far, construction clients are likely to remain cautious, and new work may stay subdued for some time.
“A truce is also no guarantee of an immediate reduction in input costs for contractors. Oil prices, for example, have fallen in response to the ceasefire, but shipping through the strait will likely make a tentative return. The risk of the ceasefire collapsing remains significant, and a full return to normality is still some way off – if it happens at all in the near term.
“For now, UK construction is in a state of limbo. Much will depend on how far materials, fuel and borrowing costs rise, how long they remain elevated, and the extent to which clients maintain risk aversion.”
Although challenges remain, the March PMI indicates that the sector may be approaching a period of stabilisation. Slower rates of contraction across residential, civil engineering, and commercial segments suggest that contractors and clients are adapting to current cost pressures, with civil engineering work showing particular resilience.
