Marginal Growth for Construction After Four Month Slump

Monthly construction output is estimated to have grown by 0.8% in September 2026 after four consecutive months of decreases.

The latest figures from the Office for National Statistics (ONS) show infrastructure new work was the biggest contributor to the monthly increase, growing by 3.3%.

Despite this, total construction output still fell 0.7% in the third quarter of 2026, dragged down heavily by private housing which slid by 4.7%.

Over the three months to September, five out of the nine sectors decreased, with new work falling by 1.6%. There was a slight improvement in repair and maintenance, however, which grew by 0.5%.

September recorded more positive results as total construction new orders increased by 1.2% (£107 million) in Q3 2026 compared with the previous quarter. This quarterly boost came mainly from public other new work and private commercial new work.

Meanwhile, cost pressures persisted, with annual construction output price inflation reaching 3.2% in the 12 months to September.

Marginal Growth

Richard Cook, Head of Economics at Pegasus Group

Richard Cook, Head of Economics at Pegasus Group, comments: “Another month, another sign of stalling progress for construction. A marginal increase in today’s construction output statistics is of little comfort when we need sustained momentum to restore market confidence. For all the talk of the UK economy’s resilience, there remains a lack of real, tangible growth. Construction is a key pillar of a successful economy, and for the UK outlook to improve, we need to start seeing consistent construction gains.

“The Autumn Budget was certainly a ‘steady-as-she-goes-Budget’, but the construction sector now needs to see more courageous, impactful change. Development viability challenges are not sustainable, particularly in London, and developers need the confidence to build, or else we won’t see meaningful growth in construction starts.

“Development’s struggles aren’t down to a lack of capital available, but persistent political uncertainty and the dramatically rising costs of development. The government’s 10-year plan is set to be unveiled in the coming months, and the sector will be hoping to see bold commitments and clear signs of action to really bolster confidence. Resilience only lasts for so long, and though the UK economy has held steady, geopolitical headwinds will continue to be keenly felt.

“Sustained growth in the construction sector needs to be backed up by addressing skills shortages: government efforts to address construction education are well-intended but as yet there has been little progress improving the situation when it comes to attracting more people to work in the sector. With the Milburn Review of ‘NEETs’ due to be published this month, we need to see a solution that improves employment opportunities for young people, and address skills shortages in construction.

“Nevertheless it’s encouraging that construction and development remains on the government’s agenda. We now need to start seeing greater and consistent progress in construction output, which should in turn prompt greater sector optimism, and help provide a welcome boost to the UK economy.”

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