Construction Output Up in Quarter 2 of 2026

Total construction output is estimated to have grown by 0.3% in Quarter 2, April-June 2026 compared with the previous Quarter 1.

According to the latest data from the Office for National Statistics, both new work and repair and maintenance grew by 0.4% and 0.2%, respectively.

At the sector level, five out of the nine sectors grew in Quarter 2 2026. The main positive contribution to the increase was infrastructure new work, which grew by 1.9%.

Down on the Month

Monthly construction output is estimated to have fallen by 0.1% in June 2026, this follows a decrease of 0.8% in May 2026, and a decrease of 0.1% in April 2026.

Even though there were falls into each month of Quarter 2 2026, overall the level of output in Quarter 2 was higher than in Quarter 1 2026. The decreased output in April 2026 was against a particularly strong March 2026.

The decrease in monthly output in June 2026 came solely from a decrease in new work, which fell by 0.3%, whilst repair and maintenance showed no growth.

New Orders in Quarter 2

Total construction new orders fell by 11.8% (£1,232 million) in Quarter 2 2026 compared with Quarter 1 2026. The quarterly decrease came mainly from private commercial new work and public other new work.

The annual rate of construction output price growth was 1.9% in the 12 months to June 2026, compared to CPI inflation of 2.6%.

COMMENTARY

Treading Water

Richard Cook, Head of Economics, Pegasus Group

Richard Cook, Head of Economics at Pegasus Group, said: “Construction has been sorely in need of some good news, and the decrease in today’s construction output data further compounds the pessimistic outlook. The sector has struggled to maintain momentum with a series of fits and starts in recent months: any gains are often followed by decreases, and the construction sector seems to be treading water at a time when development needs to be a key driver in pushing forward a stagnant economy.

“The economy is still feeling the effects of the Middle East, placing an additional burden on a construction sector already grappling with high costs and skills shortages. Yet for all the measures we’ve seen from a succession of governments, it’s not clear these issues have abated.

“Andy Burnham has staked his claim to remedy construction’s skills shortages, valuing the ‘the hard hat as much as the graduation cap’ by enabling earlier access to technical education and skills placements. But construction is still often misperceived as low skill and low pay when it is quite the opposite. And despite targets to introduce 60,000 more construction workers by 2029, the National Audit Office reported that only 74 young people started foundation level construction apprenticeships in 2025-26, against a DWP estimated need of 1,000.

“Perhaps rather surprisingly given the backdrop, the UK economy is proving to be remarkably resilient and compared to some of our neighbours in the G7, we are enduring the effects of global instability relatively well. Unemployment may be at almost 5% in the UK, but it is over 8% in France, where economic growth is sluggish at best. At some point though, we will need to see clear economic progress under the Labour government.

“There is room for optimism however – the government’s long-awaited revised NPPF is imminently expected, and should be instrumental in speeding up the planning process and boosting delivery. A target of 1.5 million homes seems to be ebbing further away from being achievable, but if we start seeing an uptick in delivery, the UK economy will reap the benefits too.”

Mixed Picture

Dr David Crosthwaite, BCIS Chief Economist

Dr David Crosthwaite, Chief Economist at BCIS, said: “The latest data present a mixed picture for construction. While construction output contributed to the 0.4% increase in UK GDP in the second quarter, underlying indicators point to continued weakness in the pipeline for new work.

“New construction output has now contracted year-on-year in each quarter since the end of 2025, while monthly new work output has fallen on an annual basis for nine consecutive months as of June 2026. New orders across all work also declined substantially on quarterly and annual bases in the second quarter.

“The industry’s contribution to growth demonstrates its resilience, particularly given renewed inflationary pressures and higher energy costs. However, the prolonged contraction in appetite for new construction is not sustainable for the industry or wider economy.

“Construction is integral to the government’s growth ambitions. Investment in new construction supports activity throughout the economy, from supply chains to employment and fixed capital formation. Softer demand across the market risks further insolvencies, pressure on domestic materials and product supply chains and lasting damage to industry capacity.

“The Autumn Budget must therefore be a vehicle for incentivising construction investment and restoring business confidence. Doing so could help to ease economic stagnation that continues to undermine UK industries and living standards.”

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