The S&P Global UK Construction PMI rose to 40.1 in December of 2025 from a five-year low of 39.4 in November, but the reading still indicated a full year of monthly contractions.

Construction firms pointed to fragile confidence that resulted in a marked reduction in new orders to replace finished projects.

Housing activity (33.5 vs 35.4) and commercial construction (42 vs 43.8) dropped the most since May 2020.

Commenting on the latest figures Phoebus Software chief sales and marketing officer Richard Pike said: “December rounded off a dismal year for UK housebuilders with another sharp fall in activity – although the rate of contraction eased from November’s five and half year low. Even though interest rates have stabilised and demand for homes remains high, confidence remains weak. Build costs also remain high and the construction sector has been hit particularly hard by labour shortages, with overall unemployment now at 5.1%.”

He added: “On the positive side, there was a recovery in optimism in December – the highest for five months – and with the Budget out of the way there is more certainty for developers, which should encourage investment. Going into 2026, falling rates and improving affordability will stimulate demand, but more radical action is needed to remove bottlenecks in the planning system, force the volume players to get building and support smaller developers with incentives.”