UK construction sector ‘stabilises’ as builders see economic rebound ahead – business live

Eurozone construction downturn also eases while in financial markets, European shares rise and Brent crude holds below $80 a barrel

The downturn in UK construction has also eased, and optimism among firms improved – more good news for Andy Burnham’s government, after the service sector’s return to growth in July.

The headline index from S&P Global’s monthly survey jumped to 44.7 in July, up from 34.4 in June, but still below the 50 mark that divides contraction from growth.

July data suggests that the performance of UK construction sector has started to stabilise after a sharp downturn throughout the second quarter of 2026. Business activity levels continued to decline in all three main categories, but in each case the rate of contraction was much slower than in June. This was supported by the weakest reduction in new business intakes since September 2025.

A renewed improvement in supplier performance and softer input cost inflation were also positive developments in July. Construction companies widely commented on fuel surcharges and higher raw material prices due to the war in the Middle East, but the overall rate of cost inflation was the lowest for five months.

The construction sector in the eurozone remained in solid contraction territory at the start of the third quarter, with all three monitored sectors continuing the declines seen a month prior. The downturn was also broad-based by nation, as Germany posted a steeper reduction in activity.

July data saw a further softening in cost pressures, however, as the surge in inflation from rapidly rising energy prices following the war in the Middle East eased further since April’s recent record.