Construction sector shows signs of recovery while housebuilding stays weak.

The S&P Global UK construction PMI rose to 46.4 in January from December's 40.1, signaling improvement though activity remains below the 50 contraction threshold; housebuilding was the weakest sub-sector and job losses continued for a 13th month.

Britain's construction sector reported clearer signs of improvement in January, according to the S&P Global UK construction PMI, after a notably weak reading in December. The PMI rose to 46.4 in January from 40.1 in December and was the best result since June of the previous year. Economists had generally expected a reading near 42. Builders reported improving sales enquiries and higher business optimism, though several headwinds persisted. Key findings: - The S&P Global UK construction PMI was 46.4 in January, up from 40.1 in December, but still below the 50 mark that separates growth from contraction. - Housebuilding remained the weakest part of the sector, though its rate of decline eased to the slowest in three months. - Firms reported higher input and labour costs, partly linked to last year’s rises in national insurance contributions and the minimum wage. - Employment continued to fall, extending a run of job losses to 13 months, but the pace of reductions moderated. - Business activity expectations and optimism rebounded to their highest levels since last May, with some firms noting improved investment sentiment. Summary: The PMI reading indicates a tentative improvement in construction activity, while underlying demand and cost pressures continue to constrain the sector. An economist cited in the report expects output to rise only slowly as the Bank of England approaches the end of its cutting cycle and borrowing costs remain high. Government spending priorities were noted as a further limiting factor for activity in 2026. Undetermined at this time.