UK construction PMI for January rebounds better than expected, industry confidence improves.

According to the latest report released by S&P Global, the UK's January Construction Purchasing Managers' Index (PMI) rose from 40.1 in December of last year to 46.4. This performance far exceeded the market's previous expectations of 42.0, and set a record high since June 2025. Although the index is still below the boom-bust line of 50.0, indicating that the industry's longest contraction period since the 2007 financial crisis is still ongoing, the sharp slowdown in the rate of contraction suggests that the downward pressure on the UK construction industry is being effectively relieved, and the overall industry sentiment shows signs of bottoming out. Tim Moore, Director of Economics at S&P Global Market Intelligence, stated: "The January data provides encouraging signs that the UK construction industry has emerged from its sharp decline, and businesses are more hopeful for new projects in 2026." Following the announcement of the budget by UK Chancellor Rishi Sunak on November 26, 2025, all sectors of the index have rebounded from the low point of December 2025 as demand stabilizes. Rebounds in the public sector and an increase in commercial sales consultations have driven the overall volume of new business to decrease at the slowest rate in three months. The housing construction project prioritized by the Labour government which promises to build 1.5 million new homes is currently mired in a triple dilemma of weak demand, low customer confidence, and insufficient new project starts, making it the weakest segment in the construction industry. However, the latest S&P report has captured positive signals: data shows that residential construction activity is rebounding from the lowest point reached during the epidemic last month. Builders in various industries are still struggling to deal with the issue of cost pressure eroding profits. Companies reported that procurement costs have seen the largest increase since September of last year, driven by rising wages and raw material prices. These unfavorable factors have led construction companies to lay off employees for the 13th consecutive month. Despite this, improvements in investment sentiment and lower interest rates have boosted optimistic expectations for the next year. The S&P Confidence Index has risen to its highest level since May 2025, with nearly 40% of surveyed companies expecting output to improve in the next 12 months, while only 17% expect activity to decrease.