Is the UK Construction Industry in Turmoil?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

At the beginning of the month, search engines were flooded with news headlines from construction media outlets, stating that the UK construction industry is experiencing steep decline; April marking the fourth consecutive month to see a decrease in activity.

The news, which has dominated specialist headlines over the last week especially, comes following the latest S&P Global construction purchasing managers’ index (PMI) which showed a reading of 46.6 for last month. Although it’s worth noting that this is a slight improvement from the 46.4 documented in March.

So, is the UK construction industry really in turmoil as recent headlines suggest, or are they simply scaremongering?

A Lack of New Work for Civil Engineers

The latest PMI reading in the civil engineering sector may be one of the leading reasons why the index has fallen so far behind the magic number of 50 - where anything above 50 indicates growth - as the sector reported a 43.1 reading in April. This, it’s said, was due to a lack of new work to replace completed projects.

Residential Construction is Showing Signs of Stabilisation

Residential construction work, however, saw activity decline again, but with a reading of 47.1, which in reality saw the sector delivering its strongest performance so far in 2025.

Although levels continued to fall through April, the decline actually began to ease which, it's said, is due to slower reductions in residential building work. As such, residential construction specifically is actually reaching a period of stabilisation and showing relative promise in the industry.

Why The Latest PMI is Low

There are many reasons why the latest PMI is low, and why the UK construction industry is experiencing this worry period of decline, including:

Increased material and energy costs: energy costs have been on the rise for a number of years and are significantly, negatively impacting multiple industries - as we’ve seen in UK steel, for example. This, compounded by inflated materials costs, again over recent years, has led to UK construction companies unable to compete for work with their European counterparts.

US tariffs and global uncertainty: the new US tariffs that came into force at the end of March have led to global uncertainty, hesitation and reluctance to trade - where these tariffs are set to between 10% and 50% - leaving companies across the world frozen and unsure of how to proceed. Of course, this doesn’t just affect the construction industry! In fact, the tariffs have affected almost all industries, including renewable energy, tech and even gas & oil.

Rising competition from overseas: where the UK construction industry is struggling to compete with European prices, there is also rising competition from as far afield as China. For example, the trade war between the US and China has implications for the UK construction industry, potentially leading to increased costs and uncertainties, and China’s Belt and Road Initiative aims to expand the country’s influence globally, inclusive of construction and infrastructure projects.

What’s The Solution to An Industry in Turmoil?  

Particularly given rising energy, inflation and material costs, and intensifying competition from Europe and the Far East, compounded by US tariffs and global political uncertainty, it looks as though the road is long for UK construction, but certainly not entirely bleak.

Residential construction is stabilising which does show promise and an appetite for construction - people need homes, just as we need office buildings, hospitals, roads and tunnels.

So, what’s the solution?

The UK construction industry may not be able to compete with overseas prices and certainly can’t do anything to ease global tension or find a solution to the US tariff trouble that has global trade paralysed, but it may be able to find some success in -

Upskilling and retaining experienced workers: harnessing the knowledge of retiring professionals, upskilling and retaining experienced workers can bridge any skills gaps, reduce industry pressures and improve productivity.

Embracing new technologies and new methods: utilising new technologies can improve efficiency, reduce costs, and enhance project management efforts, improving productivity and project deliverables which - in turn - can lead to a higher quality of work and exceeding client expectations, client retention and improved reputation.

Negotiating flexible contracts: moving to more flexible contracts with specific and tailored clauses that leave room for price fluctuations due to inflation and rising energy/materials costs will help construction companies ensure fair cost sharing.

Government support and collaboration: crucially, the government needs to support and collaborate with the UK construction industry, demonstrating an understanding for the importance of construction in the UK by supporting policy reforms that encourage investment in the sector and address regulatory hurdles. Alongside this, developing long-term partnerships between government and private sector companies and contractors would serve to drive innovation and growth, and government investment in infrastructure could also provide a platform for growth and create more opportunities for the industry.

Essentially, if UK construction is to find its way back to growth, the industry needs to re-think its strategy and our government needs to step in, step up and show support in practical ways, not least of all by encouraging investment.

We hope that the second quarter of 2025 will show a much more positive picture for the UK construction industry; an industry that is traditionally robust, secure, and has stood the test of time.