The UK construction sector continues to shrink amid economic uncertainty, labour shortages, and falling demand, threatening Labour’s goal to deliver 1.5 million homes in the current Parliament, despite official optimism on housing ambitions.
Labour’s ambition to “build, baby, build” and deliver 1.5 million new homes within the current Parliament faces significant headwinds as the UK construction sector contracts for the ninth consecutive month. The latest Purchasing Managers’ Index (PMI) for the construction industry registered 46.2 in September, slightly up from 45.5 in August but still well below the 50 threshold that marks expansion. This prolonged downturn, the longest since the pandemic, reflects deep uncertainty linked to the upcoming Budget and an adverse business environment.
The construction sector’s persistent shrinkage comes amid fears of tax increases expected in the November Budget, which have sapped industry confidence and investment appetite. Employment in construction has also declined for the ninth straight month, marking the worst run since the Covid crisis. S&P Global Market Intelligence’s economics director, Tim Moore, observed that firms face pressure on multiple fronts while sentiment remains subdued with no clear turning point yet in sight. Despite official data showing a modest 1.0% rise in construction output in the second quarter of 2025, the PMI data depict ongoing challenges for the sector where financial pressures continue to weigh heavily.
The slump in construction contrasts sharply with Labour’s housing targets and wider economic ambitions. Housing Secretary Steve Reed remains committed to ramping up building activity, but firms are grappling not only with fiscal uncertainty but also with broader structural issues. Recruitment difficulties are acute — a recent survey by the British Chambers of Commerce found that 82% of construction and engineering firms reported major hiring challenges, up sharply from 69% earlier. The sector’s workforce crunch is compounded by the legacy of Brexit and the pandemic, which have disrupted labour supply and training pipelines.
Further, the government’s broader targets for economic growth through infrastructure investment rely heavily on the construction industry, which contributes about 6% to GDP. Yet confidence in the sector is at its weakest since late 2022, with only about a third of firms optimistic about output growth over the next year. The slowdown is particularly marked in house-building and civil engineering, both hit by weak demand, intense price competition, and cautious client spending. High borrowing costs and rising input prices add to the strain. These headwinds echo earlier steep contractions seen as recently as February 2025, when house-building output plummeted to levels not seen since the global financial crisis.
While some optimism surrounds anticipated public investment in infrastructure and energy security that might stimulate demand, firms remain cautious, deferring major capital commitments. The upcoming Budget is viewed as a potential turning point, pending clarity on tax policy and incentives to support construction activity. Labour’s broader economic strategy, focused on growth and public services, depends heavily on reversing these trends. However, persistent uncertainty, workforce shortages, and cost pressures mean the path to achieving the ambitious home-building goals is fraught with difficulty.
Meanwhile, the manufacturing sector also faces contraction, marking a significant recent decline partly due to weak demand and high operating costs. This highlights a broader pattern of subdued business confidence across key UK industries, tied to both domestic fiscal policy and global economic uncertainties.
In summary, the UK construction sector’s ongoing contraction underscores the complexity of Labour’s housing ambitions. Achieving the government’s targets will require navigating fiscal uncertainty, addressing severe labour shortages, and stimulating demand, amid a challenging cost environment. The situation calls for coordinated policy responses not only in taxation and public spending but also in workforce development and immigration to ensure the sector can meet its crucial role in the UK’s economic recovery and growth.
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Source: Noah Wire Services
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative reports on the UK construction sector’s contraction for the ninth consecutive month, with the latest Purchasing Managers’ Index (PMI) at 46.2 in September 2025. This aligns with recent reports from Reuters dated October 6, 2025, indicating the same PMI figure and highlighting the prolonged downturn in the sector. ([reuters.com](https://www.reuters.com/world/uk/uk-construction-gloom-persists-september-pmi-data-shows-2025-10-06/?utm_source=openai)) The inclusion of updated data, such as the September 2025 PMI, suggests a higher freshness score. However, the core content appears to be recycled from earlier reports, as similar narratives have been published over the past month. The report also references a press release from S&P Global Market Intelligence, which typically warrants a high freshness score due to the inclusion of recent data. Despite the updated figures, the overall narrative has been previously covered, indicating a moderate freshness score.
Quotes check
Score:
7
Notes:
The narrative includes a quote from Tim Moore, S&P Global Market Intelligence’s economics director, stating that firms face pressure on multiple fronts while sentiment remains subdued with no clear turning point yet in sight. This exact quote appears in the Reuters report dated October 6, 2025. ([reuters.com](https://www.reuters.com/world/uk/uk-construction-gloom-persists-september-pmi-data-shows-2025-10-06/?utm_source=openai)) The identical wording suggests potential reuse of content. However, no earlier instances of this specific quote were found, indicating that it may be original or exclusive content.
Source reliability
Score:
6
Notes:
The narrative originates from the Daily Mail, a reputable UK newspaper. However, the Daily Mail has faced criticism for sensationalism and inaccuracies in the past. The report references a press release from S&P Global Market Intelligence, a reputable organisation, which adds credibility to the content. Despite this, the reliance on a single source and the potential for sensationalism in the Daily Mail’s reporting warrant a moderate reliability score.
Plausability check
Score:
8
Notes:
The narrative presents a plausible account of the UK construction sector’s ongoing contraction, supported by recent data from reputable sources. The inclusion of specific figures, such as the PMI of 46.2 in September 2025, and references to official data showing a 1.0% rise in construction output in the second quarter of 2025, lend credibility to the claims. The report also highlights challenges such as recruitment difficulties and financial pressures, which are consistent with known issues in the sector. The tone and language used are appropriate for the topic and region, with no inconsistencies noted. Overall, the narrative appears plausible and well-supported by available information.
Overall assessment
Verdict (FAIL, OPEN, PASS): OPEN
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The narrative provides a detailed account of the UK construction sector’s ongoing contraction, supported by recent data and expert commentary. While the inclusion of updated figures and references to reputable sources enhance its credibility, the reliance on a single source and potential reuse of content from earlier reports raise concerns. Given these factors, the overall assessment is ‘OPEN’ with a medium confidence level.
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