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The latest bellwether S&P Global UK Construction Purchasing Managers’ Index shows an industry still in contraction.
But the decline in output is getting slower and buyers see sunnier times ahead.
The index reading was 46.4 in January – up sharply from December’s five-and-a-half year low of 40.1.
The latest reading was the highest since June 2025, but below the 50 no-change value for the thirteenth month in a row.
House building was the weakest-performing segment in January (index at 39.3), though the pace of contraction eased to its slowest for three months.
Civil engineering activity also decreased at a sharp pace in January (40.6) while the latest fall in commercial work was the slowest since May 2025 (48.4).
Business activity expectations for the year ahead continued to rebound from the 35-month low seen last November.
Around 38% of the survey panel predict a rise in output volumes during the next 12 months, while 17% foresee a reduction.
The resulting index pointed to the highest level of optimism since May 2025.
Tim Moore, Economics Director at S&P Global Market Intelligence, said: “January data provided encouraging signs that the UK construction sector has exited its tailspin, and firms are becoming more hopeful that new projects will get back on track in 2026.
“The latest reduction in total industry activity was the slowest since last June. Commercial work outperformed, with activity moving close to stabilisation amid a post-Budget boost to contract awards. House building weakness persisted, although even here the rate of decline eased considerably since December and was the
least marked for three months.
“Construction companies noted subdued underlyingdemand due to fragile client confidence and elevated risk aversion, but there were some reports of improving investment sentiment and greater sales enquiries at the start of the year. As a result, business activity expectations rebounded to an eight-month high, while the
pace of job losses moderated.
“Supply conditions improved again in January. Lead times for the delivery of construction items shortened for the sixth month in a row and subcontractor availability increased at a solid pace.
“However, margins were under pressure as higher wages and raw material prices led to the sharpest rise in purchasing costs since September 2025.”