What was the UK construction sector's performance in January 2026?

In January 2026, the UK construction sector's Purchasing Managers' Index (PMI) rose to 46.4, indicating an improvement and an exit from a downturn.

Is housebuilding improving in the UK?

Housebuilding activity remains the weakest part of the UK construction sector, although the pace of its decline has eased.

What are the main challenges facing UK construction firms?

Construction firms face challenges from elevated costs, including higher material prices and wages, and continued subdued underlying demand.

Home / Business and Economy / UK Construction Sector Exits Tailspin, Housing Still Strained

UK Construction Sector Exits Tailspin, Housing Still Strained

5 Feb

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Summary

Construction PMI improved to 46.4 in January from December's low.
Business optimism among builders is the highest since May.
Housebuilding remains the weakest sector, despite easing decline.

UK Construction Sector Exits Tailspin, Housing Still Strained

The UK's construction sector has signaled a positive shift, moving out of a pronounced slump with January's Purchasing Managers' Index (PMI) rising to 46.4. This marks a notable improvement from the prior month's low and represents the best performance seen since June of the previous year. Builders are experiencing a gradual increase in sales inquiries and improved sentiment, contributing to the highest business optimism levels recorded since May. This suggests a hopeful outlook for new projects starting in 2026.

Despite this overall improvement, housebuilding activity remains the most subdued area within the sector. While the pace of decline in this segment has moderated, it continues to be a significant challenge. Construction firms are also grappling with elevated costs, as suppliers pass on increased prices for materials and wages. This persistent cost pressure has contributed to ongoing staffing reductions in the sector, though the rate of job losses has slowed.