Construction Output Continues Downward Trend in August

Monthly construction output is estimated to have fallen by 0.2% in August 2026 – the fourth consecutive decrease in the monthly series.

The decline came solely from a drop in new work, which fell by 0.7%, while repair and maintenance grew by 0.4%. The main contribution to the monthly decrease in new work was private new housing, which fell by 1.9%.

Construction output also saw a decrease in the three months to August 2026, falling by 1.0%. This is the second consecutive decrease in the three-monthly series.

Over the three-month period, both new work and repair and maintenance declined by 1.4% and 0.3%, respectively.

At the sector level, five out of the nine sectors fell in the three months to August 2026. Private new housing was the main negative contributor, falling by 3.2%.

COMMENT

Seasonal Slump

Richard Cook, Senior Economics Director at Pegasus Group

Richard Cook, Senior Director of Economics at Pegasus Group, commented: “The construction industry could certainly benefit from some good news, but has been afforded no such encouragement by a decrease in today’s construction output statistics.

“Whilst not completely unexpected given the seasonal industry summer slump, the latest fall continues a trend of fits and starts. The UK economy has been resilient: we have seen GDP growth, despite all the doom and gloom. But construction is a key driver of the UK economy, and we need to see a period of sustained sector growth which will translate to a nation-wide boost.

“Only two weeks away from the Autumn Budget, the Chancellor needs to deliver some form of encouragement to restore private sector confidence. Development costs are deterring investment and ambition within the construction sector. Even hugely beneficial schemes, particularly in the capital, are falling foul of planning decisions. We need greater pragmatism in the government’s messaging if we are to meet lofty development ambitions.

Productivity Puzzle

“The UK productivity puzzle also needs to be resolved, with London a key piece that is at risk of being swept under the rug. With the capital generating almost a quarter of the UK’s GDP, boosting delivery of housing schemes in London is crucial for the country’s economy and setting us on the right course. If the government can get the messaging right, then development growth could in turn have positive ripple effects for the UK’s employment market.

“Construction is fundamental for the UK economy, and we need to see action taken to attract more international investment into the UK’s real estate sector. Forward strides have been made, such as through the NPPF, which is giving greater clarity to the sector on the planning process. Meanwhile, measures like ‘Your First Home’ could prove helpful in stimulating the residential sector and enabling greater activity. That said, these changes are no silver bullet, and comprehensive action is needed across the board to maximise growth.

“However, despite global headwinds and domestic challenges, the UK economy continues to display incredible resilience. There has been a parade of positive government messaging towards development, but this needs to translate into positive outcomes. Come the 28th October, we need clear signs of progress and commitment to letting Britain build.”

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