Published: July 21, 2025
As we move into summer, the UK construction sector continues to send mixed signals — with project pipelines strengthening and housebuilding reviving, while material costs, labour shortages, and immigration policy shifts present new challenges. Here’s what we’re seeing at Leading Edge this month.
Output Fluctuates, Q2 Growth Remains Elusive
The Office for National Statistics (ONS) reported a 0.9% rise in output in April, led by private housing and infrastructure. However, Infrastructure Now confirmed a 0.6% dip in May, leaving overall Q2 performance flat.
PMI Shows Stabilisation, With Housebuilding Leading
The S&P Global UK Construction PMI edged up to 48.8 in June, its highest since January. It remains below the neutral 50 mark, but the standout was the housebuilding sub-index, which rose to 50.7 — its first expansion since September 2024. This shift was covered by Professional Builders Merchant and Reuters, both highlighting the improving mood in the residential sector.
Surge in Project Starts Points to Confidence
Glenigan’s June Index reported a 49% increase in project starts over Q2, now 25% higher year-on-year. Private housing starts surged by 76% quarter-on-quarter, and 64% compared to June 2024. Notable schemes include the Sudbury Westlands Heath development and major social housing projects in the North West.
The West Midlands and North West posted the biggest quarterly growth at 78% and 72% respectively.
Labour Shortages Pose a Growing Risk
City & Guilds and CITB report growing labour shortages, with 76% of firms struggling to hire and an estimated 252,000 additional workers needed by 2028. ONS employment data shows falling payroll figures and a 4.7% unemployment rate, pushing up wages and project costs.
The government has announced £600m in skills funding to train 60,000 workers — but implementation remains slow.
Brick Shortages Prompt Shift Toward Timber
The Financial Times warns that UK brickmakers can only support around 250,000 new homes per year — far short of the government’s 300,000-home target. Developers are turning to timber-frame and offsite construction systems to fill the gap. These include brick-effect panels that preserve traditional appearance while speeding up delivery and cutting emissions.
Modular and Offsite Gaining Ground
Modular building continues to grow in housing and healthcare. Frameworks like NHS ProCure23 now encourage offsite-first approaches, with case studies in Leeds and Milton Keynes showcasing faster build times and carbon benefits. Modular delivery is also expanding in high-rise and education sectors.
Immigration Policy Under Scrutiny
The Centre for European Reform and The Guardian warn that recent changes to visa salary thresholds and the Shortage Occupation List may disrupt access to foreign-born tradespeople — essential for both net-zero retrofits and new housing targets.
While the government is considering a “Green Visa” route and construction exemptions, delays could impact the industry’s ability to meet the 1.5 million homes goal.
Final Thoughts from Leading Edge
The sector shows welcome signs of improvement, with strong new project starts, reviving housing confidence, and accelerating offsite methods. Yet risks remain — especially around materials, skills, and workforce supply.
At Leading Edge, we support manufacturers, contractors, and suppliers in reading the market and acting strategically — whether that means entering new segments, shaping specification strategies, or future-proofing supply chains.
👉 Contact us to find out how we can help.
Sources: ONS, Glenigan, S&P Global, CITB, City & Guilds, FT, CER, The Guardian, Reuters
Written by the Leading Edge team – July 21, 2025
