Total monthly construction output is estimated to have grown by 0.8% in September following four consecutive monthly decreases in activity, according to the latest data from the Office for National Statistics (ONS).
The increase in monthly output came from a rise in both new work and repair and maintenance, which grew by 0.9% and 0.6%, respectively. The main contribution to the monthly increase in new work was infrastructure new work, which grew by 3.3%.
Total construction output is estimated to have fallen by 0.7% in Q3 (July to Sept) 2026 compared with Q2 (Apr to Jun) 2026. New work fell by 1.6%, while repair and maintenance grew by 0.5%.
Total construction new orders grew by 1.2% (£107m) in Q3 2026 compared with Q2 2026. The increase came mainly from public other new work and private commercial new work.
Clive Docwra, managing director of McBains, said: “After a series of four consecutive disappointing monthly returns, September’s figures will be welcomed by the industry. However, the sector is still playing catch-up given that output fell over the third quarter of the year. While it’s encouraging that there was an uptick in new work orders in September, especially in infrastructure, longer term worries over housebuilding rates – which fell by 4.7% between July and September – remain.
“So no-one will be celebrating too much yet, especially as increasing build costs remain across the industry as a consequence of domestic and international factors. As our recent analysis of the market found, competitive tendering is helping constrain price growth but all these elements mean the industry is bracing itself for a challenging winter.”
Terry Woodley, managing director, development finance at Shawbrook, added: “It’s good to see output rise, and it’s a welcome lift in a tough year. But one month doesn’t make a recovery, and with construction costs still climbing, deliverability is what developers are really watching. The Budget’s measures on affordable housing funding and biodiversity net gain should help support future activity, but there’s more to do to truly turn the corner. The key challenge is making sure a scheme that’s viable when it’s funded is still deliverable through to completion, with inflation high and geopolitical headwinds still in play.”
Matthew Cook, managing partner at Goodman Jones, said: “There are still reasons for cautious optimism in parts of construction. Infrastructure, particularly energy networks, utilities and data centres, continues to provide a strong pipeline of work. Contractors that remain selective, price projects properly and protect their margins can still achieve healthy profits rather than simply chasing turnover.
“The outlook for housebuilders and residential developers is more challenging. High material, energy and labour costs, combined with subdued demand, continue to squeeze developers. The Bank of England’s decision on 5 November to raise bank rate from 3.75% to 4%, with further rises possible, adds pressure through higher mortgage and development finance costs, potentially weakening buyer confidence and project viability.
“The Budget provided some support, including an additional £1.5bn for the Social and Affordable Homes Programme and £4.7bn for the Your First Home scheme. However, these measures are unlikely to have a meaningful impact before 2027, offering little immediate relief. For now, construction remains a tale of two sectors: relative resilience in infrastructure for disciplined businesses, but a much tougher outlook for residential development.”
Phil Hughes, deputy managing director of Paragon Bank SME lending, added: “September’s 0.8% rise in construction output offers some relief after four consecutive monthly falls, with growth across both new work and repair and maintenance. Infrastructure was the main contributor to the monthly increase in new work, which should support demand across the extensive network of SME contractors, equipment providers and specialist firms involved in delivering major projects.
“A pragmatic outlook is necessary however because the quarterly picture is more subdued. Overall construction output fell by 0.7% during the third quarter. Private new housing remains a particular concern, having been the largest negative contribution to the decline. For smaller construction firms operating on tighter margins, a weak pipeline can affect confidence, recruitment and investment in new machinery and equipment.”
He continued: “There are some signs of positive movement. New orders increased by 1.2% – or £107m – during the quarter, driven mainly by public other new work and private commercial projects. Turning those orders into activity will be crucial for the health of the wider economy, given the reach of construction supply chains into manufacturing, transport and specialist services.”
