UK Construction Sector Experiences Sharpest Slowdown Since First Covid Lockdown
The UK construction sector experienced its sharpest contraction in November 2025, with the Purchasing Managers' Index (PMI) dropping to 39.4, the lowest since May 2020. This represents a significant decline from the October reading of 44.1 and falls below economists' forecast of 44.6. A PMI reading below 50 indicates sector contraction, and this steep fall is regarded as a rare level of decline comparable to the 2009 financial crisis.
The weakness was widespread across residential, infrastructure, and commercial development areas, as clients deferred investment decisions amid uncertainty surrounding the autumn budget and a weak economic outlook. Employment in the sector also declined, with the Bank of England decision-maker panel CFO survey noting a 1.8% year-on-year fall in November, the fastest in four years. Optimism remains muted, with expected employment for 2025/26 anticipated to decline by 0.7%.
Industry observers have urged caution in interpreting the PMI figures. Matthew Swannell from EY Item Club described the PMI as unusually pessimistic, suggesting it should be treated with skepticism given that official output data have shown stronger results. Similarly, Robert Wood of Pantheon Macroeconomics argued that the PMI might overstate the sector's weakness, noting that Office for National Statistics (ONS) construction output showed better performance and job postings increased in November 2025. The current figures appear partly influenced by the chaotic budget speculation surrounding the autumn budget, causing some distortion in the data.
The downturn represents a setback to the Labour government's goal of boosting infrastructure development and delivering roughly 1.5 million new homes by 2030.
