Drop in new orders hits industry confidence
Written by admin on July 6, 2025
Business optimism among contractors has hit a two-and-a-half-year low amid a fall in workloads and “fragile” client confidence, according to a survey.
The latest S&P Global UK Construction Purchasing Managers’ Index found that new orders fell in June for the sixth successive month, with the rate of decline accelerating compared with May.
“Survey respondents commented on fewer tender opportunities and intense competition for new work, reflecting weak overall demand conditions and heightened risk aversion among clients,” S&P said.
Gareth Belsham, director of consultancy Bloom Building, said the drop in new orders was a “real cause for alarm”.
He said: “Builders’ order books have got progressively thinner every single month in 2025 so far, and this is taking a severe toll on construction industry sentiment.”
However, others pointed to some reassurance from the government announcing its long-term investment plans, including £15.6bn for local transport projects in England in last month’s spending review.
“Clarity on capital investment, infrastructure spending and transport upgrades illustrate the intended direction of travel, while the new 10-year infrastructure and industrial Strategies outline the roadmap for getting there,” said Brian Smith, head of cost management and commercial at Aecom.
“Together, they should give contractors and clients greater certainty to plan, procure and deliver growth.”
Despite activity falling for the sixth month in a row, the S&P survey found it was the slowest rate of monthly decline in 2025.
The headline PMI figure was 48.8 in June, up from 47.9 in May. Any number below 50 denotes a reduction in activity.
Commercial work fell at the fastest pace since May 2020, which contractors blamed on “subdued UK economic conditions and cutbacks to investment spending among clients”, according to S&P.
Civil engineering was the weakest-performing sector, with activity falling for the sixth month running.
The one bright spot was housebuilding as higher levels of activity were recorded for the first time since last September. Firms pointed to an upturn in new projects and sales pipelines.
The last month has seen a slew of housing announcements from the government, including a promise of £39bn of funding for affordable homes over the next 10 years.
S&P’s data for June also revealed a sharp increase in purchasing costs across the construction sector. The price of concrete, insulation and timber all rose, according to respondents.
However, the overall rate of cost inflation eased for the third month in a row and was the lowest since January, S&P said.
