Total UK construction output rose in Q2 2026 despite a dramatic fall in new orders, according to the latest data from the Office for National Statistics (ONS).
Total construction new orders fell by 11.8% (£1,232m) in Q2 2026 compared with Q1 2026, with the decrease mainly caused by a fall in private commercial new work and public other new work.
Total construction output is estimated to have grown by 0.3% in Q2 2026 compared with Q1, with new work and repair and maintenance work growing by 0.4% and 0.2%, respectively. However, monthly construction output is estimated to have fallen by 0.1% in June 2026, following a decrease of 0.8% in May and a decrease of 0.1% in April.
The decrease in monthly output in June 2026 came solely from a 0.3% fall in new work, while repair and maintenance showed no growth.
Phil Hughes, deputy managing director of Paragon SME Lending, said: “While it’s encouraging to see total construction and infrastructure output edge up over the last quarter, the decline in new orders is a reminder of the sector’s fragility. Construction is a vital economic lever, supporting employment, supply chains and investment, so any slowdown in future workloads could have implications extending beyond the industry.
“As a lender, many construction firms we work with tell us that despite challenges, they still want to invest. These businesses have weathered unprecedented economic and political change for decades, which has only made them more resilient and solutions oriented – something we see first-hand every day and should not be underestimated. Whilst access to finance is part of the solution, so too is a stable policy environment and a planning system that enables development at pace.
“These businesses can play a major role in delivering economic growth, new homes and vital infrastructure, but they need the right operating conditions to do so. A more supportive and long-term policy environment, coupled with faster planning decisions, would drive momentum for the sector.”
Matthew Cook, managing partner at Goodman Jones, added: “The construction sector has shown remarkable resilience over the past year, particularly against other areas of the economy, fuelled by large infrastructure projects and a fair amount of investment into London, largely from the US. Many businesses have maintained healthy activity despite inflationary pressures, higher borrowing costs and wider uncertainty. However, these challenges are now feeding through into trading conditions, reducing output.
“The recent administration of some high-profile contractors has understandably created concern across the market, while conditions in the property sector remain particularly challenging. Developers face high build costs, squeezed margins and a subdued housing market, as consumers feel wider economic pressures. Ongoing uncertainty around government policy is also making it harder for businesses to commit to long-term investment.
“These administrations have increased scrutiny of company financials, making it more important than ever for businesses to understand how they’re perceived by prospects, customers, credit insurers and suppliers. Much of our work involves talking through year-end accounts with finance teams, so they’re well prepared and can offer real reassurance around financial stability. Managing risk also means having strong controls to monitor contract performance regularly, so issues are caught early and dealt with before they escalate.
“Whilst pockets of resilience remain for well-managed firms, many are becoming more cautious, focused on cash flow and securing visibility of work ahead. The outlook is hard to call. We’re seeing signs of significant investment into the UK as a comparatively safe market, but government needs to step up and support the wider economy for this sector to properly recover and thrive.”
Jo Streeten, managing director of buildings and places at AECOM, said: “A further fall in output would suggest many clients remain cautious about committing to new projects, with economic uncertainty continuing to weigh on investment decisions across the sector. Many schemes remain in a holding pattern as clients continue to weigh up higher financing costs and wider economic uncertainty.
“Faster government decision making on nationally significant infrastructure, such as the Affordable Housing Programme, will be key to giving businesses the certainty they need to invest. The proposed expansion at Heathrow can demonstrate the role major infrastructure can play in strengthening UK competitiveness while creating skilled jobs and training opportunities.”
Dr David Crosthwaite, chief economist at BCIS, added: “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.”
