Construction output falls as new work declines by 5.8%
UK construction output fell by 0.2% in August 2026, with a further decline in new work highlighting continued pressure on project delivery across much of the sector, according to the latest figures from the Office for National Statistics (ONS).
New work output decreased by 0.7% between July and August, while repair and maintenance (R&M) rose by 0.4%. Compared with August 2025, total construction output was down by 1.8%, with new work falling by 5.8% and R&M increasing by 3.6%.
The figures, analysed by the Building Cost Information Service (BCIS), show that the annual contraction in new construction work continues to outweigh growth in repair and maintenance activity.
Public housing records steepest annual decline
New public housing output recorded the largest annual fall among construction sectors, dropping by 28.8% in August compared with the same month last year. Private housing new work also declined, falling by 8.7%.
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Public non-housing new work, which includes projects such as health and education facilities, was down by 14.5% year on year. Private industrial output fell by 7.7%.
Infrastructure and private commercial construction were the only new work sectors to record annual growth, increasing by 1.0% and 1.5% respectively.
On a monthly basis, public housing new work fell by 3.8%, while private housing output decreased by 1.9%. Overall, new work output has continued to weaken despite some resilience in individual sectors.
Repair and maintenance provided a more positive picture. Annual output increased by 3.1% in public housing and 5.1% in private housing, while non-housing R&M rose by 2.3%.
Construction downturn weighs on economic growth
Dr David Crosthwaite, Chief Economist at BCIS, said the latest figures indicated that construction output was holding back wider economic growth.
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He said: “The latest ONS data suggest construction output is holding back wider economic growth. While a slight uplift in GDP in August is no doubt welcome, it is not cause for celebration.
“Construction, when performing well, is a powerful engine of economic growth. However, output has either contracted or remained relatively subdued on a quarterly basis for much of this year.
“The annual picture is even more concerning, with the ONS’s seasonally adjusted All Work index recording annual declines for ten consecutive months.”
Real GDP grew by 0.7% in the three months to August 2026. Construction output, however, fell by 1.0% over the same period, compared with growth of 0.9% in services and 0.2% in production.
BCIS calls for action on project viability
BCIS said government spending commitments and fiscal measures could help stimulate investment, improve project viability and support construction delivery.
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Crosthwaite called for greater certainty over housing and infrastructure funding, alongside an update to the National Infrastructure and Service Transformation Authority’s (NISTA) infrastructure pipeline.
He also highlighted the potential impact of business costs, including fuel duty, statutory wage thresholds and employers’ National Insurance contributions.
He said: “Sector-specific interventions are also needed. With both public and private new housing output declining in August, the government must urgently examine the cumulative costs of development and consider what concessions or targeted support could help improve project viability.”
The figures underline the continuing challenges facing contractors and the wider supply chain, particularly in new housing and publicly funded projects, as the sector looks for a sustained recovery in demand.
