Britain’s construction sector has suffered a sharp downturn, with firms battered by surging costs, slowing demand and worsening supply chain disruption in another blow to the UK economy under Labour.
New figures from S&P Global showed the UK Construction Purchasing Managers’ Index fell to 39.7 in April, down from 45.6 in March and far below the 50 mark that separates growth from contraction.
The reading marks a severe decline in activity across the industry.
The slump was broad based, with civil engineering activity falling to 35.3 and housebuilding dropping to 38.2. Commercial construction also deteriorated, recording its fastest fall of the year so far.
Builders warned that rising borrowing costs, fragile investor confidence and escalating global tensions were choking off new work and delaying projects. Firms reported fewer tender opportunities and weaker demand, with many blaming prolonged uncertainty linked to conflict in the Middle East.
The latest figures will heap further pressure on Labour ministers, whose repeated promises to unleash growth and revive the economy are increasingly colliding with worsening conditions on the ground for British industry. Critics said the data exposed the widening gap between Labour’s rhetoric on infrastructure and housing and the reality facing firms struggling under rising costs, higher taxes and mounting regulatory burdens.
Neil Jefferson, chief executive of the Home Builders Federation, said: “The government’s ambition for new homes relies heavily on private home builders to deliver, yet it is not providing the conditions for these businesses to operate.”
Construction companies also complained of intensifying red tape, rising operating pressures and an increasingly hostile business environment under Labour, with many firms choosing not to replace departing staff as workloads shrank and wage bills climbed. Industry figures warned that higher employment costs and mounting compliance requirements were further squeezing already thin margins across the sector.
S&P Global said new business declined at the sharpest rate since November 2025, while staffing levels fell for the fourth consecutive month.
Tim Moore, Economics Director at S&P Global Market Intelligence, said the industry was facing an alarming acceleration in costs.
“A rapid acceleration of input cost inflation was seen across the UK construction sector in April,” he said.
“Around two thirds of the survey panel reported higher cost burdens in April, which was overwhelmingly linked to fuel surcharges and subsequent rises in raw material prices.”
Moore added that supply chains were under mounting strain, with international shipping delays and difficulties importing materials from the Gulf region contributing to the longest supplier delivery delays since December 2022.
Fuel surcharges and transport costs were identified as major drivers of inflation across the sector. Nearly 70 per cent of firms surveyed reported rising input costs during April, while subcontractors increased their prices at the fastest pace in three years.
Industry leaders warned that the deteriorating conditions could further damage housing delivery targets and delay major infrastructure projects.
The figures are likely to intensify scrutiny of Labour’s economic strategy after months of weak business confidence, sluggish private sector investment and growing concern that ministers have failed to restore confidence among employers and developers.
Despite Labour’s repeated promises to turbocharge growth and deliver a new wave of housebuilding, firms said elevated borrowing costs, weak demand and fragile investment sentiment continued to weigh heavily on activity. Business leaders increasingly fear that rising taxes, regulatory uncertainty and persistent inflationary pressures are undermining confidence across the construction industry.
Although some companies expressed hope that long term infrastructure work and a stabilisation in global tensions could support a recovery later in the year, overall confidence weakened to its lowest level since November 2025.
The S&P Global survey, based on responses from around 150 construction companies collected between April 9 and April 29, paints a bleak picture for a sector already struggling with weak demand and rising financial pressure.
Economists warned that the sharp slowdown in construction activity could become an additional drag on wider economic growth in the months ahead.
