UK construction output contracted for the 17th consecutive month in May, reflecting the fastest pace of decline in six years, according to S&P's latest UK Construction Purchasing Managers' Index (PMI).

S&P UK Construction PMI for May

The headline construction PMI figure for May fell to 38.2, from 39.7 in April, as the sector continued to grapple with the prolonged economic impact of the Middle East conflict.

The figures reflect shrinking order books and rising economic uncertainty driving a steep decline in construction, with experts warning that the sector seems particularly vulnerable to macroeconomic challenges.

At the same time, higher energy, fuel and transportation costs led to the fastest pace of input price inflation since June 2022, S&P reported.

Housebuilding, at 36.0, remained below the PMI index figure of 40 for a seventh consecutive month, down from 38.7 month on month, while the new orders index fell to 37.5, the lowest figure since May 2020.

S&P economics director Tim Moore said: “Concerns about a prolonged decline in construction order books, alongside unfavourable near-term UK economic prospects, weighed on business optimism in May.

“The index has fallen sharply since the start of 2026 and confidence levels are now almost as low as those seen ahead of last autumn’s Budget.

“Housebuilding remained especially subdued and there were fresh challenges in the construction sector from a considerable softening of commercial activity since April. Anecdotal evidence suggested that economic uncertainty and rising inflation in the wake of the Middle East conflict had triggered the steepest drop in new work since the beginning of the pandemic.”

Ian Dean, managing director of construction materials supplier Holcim UK, said the latest index figure “should put rest the idea that the sector is simply in a holding pattern”, instead pointing to a “new normal” of volatility, a weak pipeline and a lack of certainty on costs.

“What the data shows is a market where viable schemes are no longer flowing through at the same rate, particularly in housing and commercial,” he added. “When borrowing costs remain high, input prices are volatile and supply chains are unpredictable, projects grind to a halt.

“That is why pipeline visibility is now the defining issue. Where activity is holding up, in infrastructure and energy, it is not by accident.”

Kelly Boorman, national head of construction at auditing and tax consultancy RSM UK, said: “Sentiment across the construction sector has taken a significant blow due to the impact of the Middle East conflict.

“There has been some mobilisation across larger infrastructure projects, with defence and healthcare proving resilient, but with the new orders index down to the lowest level since the pandemic, at 37.5, the pipeline contraction is now evident.”

Boorman added that with construction insolvencies expected to rise in the coming month, there was an “urgent need for government reforms” to support viability and to improve access to funding.

Thomas Pugh, chief economist at RSM UK, said: “The construction industry looks more vulnerable than other industries to the fallout of the war in Iran.”

Richard Pike, sales and marketing director at Phoebus Software, warned the government’s housebuilding ambitions were at “risk of looking like another broken promise unless the structural barriers holding back development are tackled with urgency”.

He added: “Weak demand, supplier issues and fragile client confidence have led to projects being delayed or stalled and, while activity may begin to stabilise, any improvement is likely to be gradual through 2026 as financing conditions ease.”