New Work Hit Hardest as Construction Output Falls in Q4 2025

Industry News

Housebuilding site

Construction output is estimated to have reduced by 2.1% in the last three months of 2025 compared with Q3.

According to the latest data from the Office for National Statistics, new work was hit the hardest, falling by 2.6%, while repair and maintenance fell by 1.5%.

At the sector level, seven out of the nine sectors fell in Quarter 4 2025. The main negative contributor to the decrease was private new housing, which fell by 3.6%.

Total construction new orders fell by 3.8% (£469 million) in Quarter 4 2025 compared with Quarter 3 2025; this quarterly decrease came mainly from private commercial new work and private industrial new work

RMI Fell in December

In the month of December 2025, construction output is estimated to have fallen by 0.5% in December 2025, adjusted from previous estimates. The decrease came solely from a fall in repair and maintenance of 2.5%, as new work grew by 1.0% in the same period.

Construction Output in 2025

Overall, annual construction output increased by 1.8% in 2025 compared with 2024; this is the fifth consecutive year of annual growth.

The annual rate of construction output price growth was 2.7% in the 12 months to December 2025.

INDUSTRY COMMENT

Bellwether

Samuel Fuller, Director of Financial Markets Online, commented: “The construction industry, a useful bellwether for wider business sentiment, is still running on empty. Total construction output shrank by 2.1%, and housebuilding by 3.6%, in the final quarter. So much for this being a government of ‘builders not blockers’.

“Building sites are the photo opp of choice for Chancellors keen to crow about economic growth, but Rachel Reeves will get a frosty reception if she dons a hard hat and boots today. The ONS data also revealed that the value of new construction orders placed in the final quarter fell by a chastening £469m.”

“If next week’s inflation figures come in low, there’s an increasing chance that UK interest rates will be cut as early as next month.”

Persistent Issues

Richard Cook, Senior Economics Director at Pegasus Group, said: “Whilst outputs can fall in December due to a slow holiday period, the continued declines we have seen over the past few months should be a cause for concern. The fact is that persistent issues around skills shortages, an ageing workforce, and a slow-moving planning system are all continuing to hamper growth in the construction industry; failing to address these will set back the UK’s economic growth too.

“The Government has taken a proactive approach to address these problems: for instance, changes to the NPPF and new announcements this week to create more construction apprenticeship and T Level opportunities in education estates – which will develop talent with transferrable skills for the wider sector – will be vital in reversing the decline. However, the deep-rooted issues affecting construction outputs cannot be reversed overnight: the Government’s measures will take time to create real change.”

Confidence Ebbing Away

Brian Berry, Chief Executive of the FMB, said: “The ONS figures show that conditions for small builders deteriorated significantly towards the end of last year. Falling output alongside a drop in new orders shows that workloads are shrinking and confidence is ebbing away across the sector. The weakness in private new housing is particularly concerning as this demonstrates that Government’s housing targets are falling behind.

“With activity declining across most construction sectors and signs that repair and maintenance work is also slowing, many firms are facing a tough start to 2026. The Government must act quickly to stabilise the economic environment, restore confidence and get projects moving again. That means investing in planning capacity, supporting access to finance, and a clear, long‑term strategy for housing and construction. Without decisive intervention, there is a real risk that small builders will continue to pull back, making it harder to grow the economy and deliver the homes the country urgently needs.”