Written by the Leading Edge team – 21st September 2026
The latest construction data continues to paint a difficult picture for the UK market. Output has slipped, housebuilding has weakened further and demand for some of the most fundamental construction materials is at levels not seen since the pandemic.
But there is another side to the September data.
While projects starting on site remain weak, contract awards have strengthened significantly and some forward-looking indicators are beginning to improve. The question is whether this stronger pipeline will translate into actual construction activity and, importantly for building product manufacturers and suppliers, increased product demand.
Construction output slips after a stronger spring
The latest ONS construction output figures show that construction output fell by 0.5% in the three months to July 2026, reversing the stronger growth recorded earlier in the spring. Both new work and repair and maintenance declined, by 0.4% and 0.7% respectively.
The monthly figure was marginally more positive, with output increasing by 0.1% in July. However, this came entirely from repair and maintenance, which grew by 0.8%, while new work fell by 0.4%.
Housing was particularly weak. Private housing new work fell by 4.9% in July alone, while private housing repair and maintenance was the largest contributor to the three-month decline.
This contrasts with the wider economy. UK GDP grew by 0.4% in the three months to July, while construction contracted by 0.5%. Compared with the same three months of 2025, construction output was 2.3% lower.
Construction PMI remains firmly in contraction
The September S&P Global UK Construction PMI, covering activity during August, provides a similar picture.
The headline Total Activity Index fell slightly from 44.7 in July to 44.3 in August, remaining below the 50.0 no-change mark for the twentieth consecutive month.
There were, however, considerable differences between sectors.
Housing fell sharply from 41.8 to 37.6, while commercial construction improved from 46.8 to 47.8, its slowest rate of contraction since January. Civil engineering also improved for the second consecutive month, rising from 38.3 to 40.5. All three remain in contraction, but the direction of travel outside housing is at least somewhat more encouraging.
New orders provide another small positive. The index edged up to 47.7, its highest since September 2025. S&P respondents linked some of the new business being won to data centre construction and infrastructure, particularly transport.
There was also an interesting change further down the supply chain. Subcontractor usage increased for the first time since November 2024, reaching its highest level for just over two years.
These aren’t signs of a construction recovery yet, but they do suggest that some parts of the market are beginning to move in a more positive direction.
Housebuilding remains the biggest concern
Housing stands out as one of the weakest parts of the current market.
Alongside the sharp fall in the PMI housing index and July’s decline in private housing new work, the latest NHBC new home registration figures show that 29,162 new homes were registered in Q2 2026, 4% fewer than a year earlier.
Private-sector registrations fell by 5%, while rental and affordable registrations were broadly unchanged. NHBC attributed the slowdown to a combination of elevated interest rates, geopolitical uncertainty, rising costs and affordability pressures affecting consumer demand.
The regional picture is highly varied. Registrations fell by 42% in the South West, 36% in the East Midlands and 34% in Wales. London recorded a 170% increase, although NHBC cautions that registration volumes in the capital can be volatile because of the impact of individual large developments.
Taken together, the latest indicators suggest housebuilders remain cautious about increasing build rates while demand and viability remain uncertain.
Weak construction product demand is now very visible
For building product manufacturers and suppliers, perhaps the most striking September evidence comes from the materials data.
Department for Business and Trade figures reported by BCIS show just how far demand for some key heavy-side materials has fallen.
Brick deliveries in Great Britain fell by 22.8% in the year to July, reaching their lowest monthly level since May 2020. They were also 38.8% below July 2019 levels.
At the same time, brick stocks reached 541 million, 16.1% higher than a year earlier and 42.6% above July 2019.
Concrete blocks tell a similar story. Deliveries were down 10.8% year-on-year and also at their lowest level since May 2020, while stocks had risen by more than 55% compared with July 2025.
The weakness extends beyond bricks and blocks. Sand and gravel sales in Q2 were 9.2% lower than a year earlier and 36.6% below Q2 2019, while ready-mixed concrete deliveries were down 6.1% year-on-year and more than a third below their 2019 level.
The PMI reinforces this. Purchasing activity dropped from 45.3 in July to 42.5 in August, with S&P reporting a sharp decline in demand for construction products and materials. Purchasing has now been falling continuously since December 2024.
At the same time, costs have not disappeared as a concern. The PMI Input Prices Index eased to 65.9, its lowest for six months, but still indicates strong cost inflation. Metals, plastics, insulation, fuel and transport were among the areas where respondents reported price increases.
Latest DBT construction materials price data reported by BCIS also shows prices for all construction work 5.9% higher in July than a year earlier.
For manufacturers, that creates an uncomfortable combination: weak volumes alongside continued upward pressure on many input costs.
Project starts are weak, but contract awards tell a different story
Perhaps the most interesting part of September’s market picture is what is happening further forward in the construction pipeline.
Glenigan’s latest data shows underlying project starts below £100 million remained weak in the three months to August. Starts were 2% lower than the preceding three months and 20% below a year earlier. Residential starts were particularly weak, falling 36% year-on-year.
Its wider September Construction Review, including major projects, paints an even more dramatic picture for current starts. The value of project starts fell 49% against the preceding three months and 28% year-on-year.
However, main contract awards increased by 45% over the quarter and by 120% compared with a year earlier.
That is a significant divergence.
The improvement is not evenly spread. Glenigan reports particularly strong forward pipelines in areas including healthcare and other public-sector work, while major infrastructure projects have also contributed to the rise in contract awards.
This broadly fits with the pattern we identified in our August update, when water, energy, data centres and major infrastructure stood out against a much weaker overall market.
It also fits the latest PMI, where firms specifically reported support from transport infrastructure, data centres and energy projects.
But a stronger pipeline does not mean an immediate recovery
This distinction is important.
A contract award does not immediately translate into construction output, and it certainly doesn’t mean that all the products required for that project are ordered the following day.
There can be a considerable lag between a project receiving planning approval, a main contract being awarded, work starting on site and different packages of building products and materials eventually being required.
That helps explain why apparently contradictory indicators can coexist. Contract awards can rise sharply while construction starts, product purchasing and materials deliveries remain weak.
There is also no guarantee that every project progresses according to its original programme.
Arcadis’ Autumn 2026 Market View highlights this fragility. New-build orders fell by 11.9% quarter-on-quarter in Q2 and were 18.1% lower than a year earlier. Arcadis points to weak underlying demand, delayed decisions, slower approvals and investor uncertainty as continuing constraints.
It also highlights renewed cost pressure. Materials inflation for all work reached 6% year-on-year in June, while higher energy and commodity costs are creating additional risks for contractors and clients.
So while stronger contract awards are encouraging, we need to see them translate into sustained starts and workloads before calling a broader recovery.
Final thoughts from Leading Edge
September’s construction data gives us two quite different pictures of the market.
The market today remains weak. Construction output has slipped, housebuilding has deteriorated further and demand for key construction products is exceptionally subdued. Rising stocks of bricks and blocks provide particularly tangible evidence of just how weak demand currently is.
But there are some more positive signs further forward.
New orders in the PMI are declining at their slowest rate for almost a year, subcontractor usage has returned to growth and Glenigan’s contract awards data suggests that a stronger pipeline is forming in parts of the market.
For building product manufacturers and suppliers, the timing matters.
An improvement in project awards today may not translate into stronger product sales for several months, and the opportunities are unlikely to be evenly distributed. Infrastructure, healthcare, energy, data centres and selected commercial markets are showing different dynamics to private housing and other weaker sectors.
We therefore think the next stage will be less about waiting for a single headline indicator to declare that construction has “recovered”, and more about tracking where projects are actually progressing through the pipeline and when that activity is likely to translate into demand for individual products and materials.
There are some grounds for greater optimism about 2027, but September’s evidence suggests that for many construction product manufacturers, the difficult trading conditions of 2026 are not over yet.
Sources: Office for National Statistics | S&P Global | Glenigan | Arcadis | BCIS | NHBC | Department for Business and Trade
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