Source: Sharecast
The S&P Global purchasing managers’ index for the sector ticked up to 46.1 from 44.3 in August. This was still well below the 50.0 level that separates contraction from expansion but marked the slowest fall in construction output since January.
Slower rates of contraction were seen in the residential, commercial and civil engineering segments. Meanwhile, commercial construction was the most resilient, with business activity falling only marginally and at the weakest pace since May 2025.
Housing activity remained the worst-performing area of the construction sector, with many survey respondents linking lower output to sluggish market conditions due to geopolitical tensions and elevated borrowing costs.
Tim Moore, economics director at S&P Global Market Intelligence, said: "All three sub-sectors have seen a degree of stabilisation relative to the rapid declines reported in the second quarter of 2026. In September, commercial building work saw its smallest fall in activity since May 2025. House building was again the weakest performer as rising borrowing costs and unfavourable market conditions weighed on output.
"Total new orders were relatively subdued in September as construction firms reported longer sales conversion cycles and clients deferred decision-making on major projects. This was attributed to subdued demand and geopolitical tensions, while some also noted pressure from sharply rising input costs. Latest data indicated that overall input price inflation softened for the fourth month in a row, but this trend seems unlikely to endure given recently escalating fuel prices and transportation costs.
"Softer order books, elevated inflationary pressures and concerns about rising borrowing costs were all reasons for construction companies to moderate their year ahead growth expectations during September. This led to a sharp drop in business optimism to its lowest since May."