Construction entered 2026 still under pressure, but with early signs that the market may be nearing a turning point. This update combines the latest official output data, industry sentiment, and forward-looking commentary to help product manufacturers, suppliers and specifiers understand what’s driving demand right now — and which segments may recover first.
Output: late‑2025 weakness confirmed by the latest ONS release
The newest ONS Construction Output bulletin confirms that the sector weakened further into late 2025, with falling activity across both new work and repair & maintenance. The ONS notes that survey feedback referenced delays to work and spending caution linked to wider economic uncertainty heading into the Autumn Budget period.
For an industry-facing summary of the same release, the Construction Leadership Council highlighted the key drivers and the continued weakness in housing-related activity.
Sentiment: PMI still contracting, but expectations edge up
Survey evidence remains downbeat. Reporting on the December 2025 UK Construction PMI shows activity remaining below the growth threshold, with weakness most pronounced in housing and civil engineering, while commercial work is comparatively less weak (though still contracting).
What’s notable for early 2026 is confidence: while workloads remain soft, a higher share of firms expect activity to improve through 2026, suggesting decision-making could begin to normalise as uncertainty fades.
Pipeline view: project starts vs output
A useful ‘pipeline lens’ this month comes from Glenigan’s latest index to end‑December 2025, which suggests stronger momentum in some non-residential categories than in private residential. For suppliers, that split matters — it hints that product categories aligned to commercial, industrial and public programmes may see steadier demand than housebuilding-led volume lines in the near term
Merchants and ‘real economy’ demand: mixed but not collapsing
Merchants data provides a practical check on what’s moving through the trade channel. The Builders Merchant Building Index (BMBI) reported small year-on-year value growth in October 2025, with slightly higher volumes and marginally lower prices, but strong variation by category — reinforcing that demand is uneven rather than uniformly weak.
What the Bank of England is hearing
The Bank of England’s Agents’ Summary (December 2025) supports the view that conditions remain challenging, with delayed decision-making and cautious clients. However, it also indicates some expectation that conditions become more supportive as 2026 progresses — particularly where infrastructure and public-sector activity feeds into site work
Final thoughts from Leading Edge
January’s picture is still dominated by contraction — but the shape of the market is becoming clearer. Near-term opportunity looks more constructive in parts of non-residential and civils than in private residential, and merchant sales suggest some categories are holding up better than heavy structural demand. At Leading Edge, we help clients interpret these signals in commercial terms — tracking early indicators, understanding specification behaviour, and identifying where demand is most likely to recover first.
Contact us to discuss how we can support your 2026 strategy.
Sources: ONS, Construction Leadership Council (CLC), S&P Global/CIPS (via PMI coverage), Glenigan, Builders Merchant Building Index (BMBI), Bank of England Agents’ Summary
Written by the Leading Edge team – 23rd January 2026
