Construction job losses rocketed in March

UK construction firms shed staff in March at the fastest rate since October 2020, according to the latest S&P PMI monthly survey of leading firms.

Today’s headline S&P Global UK Construction Purchasing Managers’ Index (PMI) showed a third month of shrinking activity, although the pace slowed from the 57-month low seen in February.

S&P said that input price inflation accelerated to its strongest since January 2023, fuelled by the rises in National Insurance contributions and the National Minimum Wage at the start of April.

Tim Moore, economics director at S&P Global Market Intelligence, said that a lack of new projects, alongside pressure on margins from rising payroll costs, led to hiring freezes and the non-replacement of departing staff in March.

Atul Kariya, head of construction and real estate at accountancy firm MHA, said: “We are seeing from the market and our clients that the result of the high tax burden for businesses combined with onerous regulation is disincentivising construction companies from investing in new staff and new projects.

“With the cost of employing staff kicking in from 1 April, it is no surprise that we’re seeing stagnant growth and declining confidence in the construction sector.”

Lower levels of incoming new construction work have been recorded throughout 2025, with respondents to S&P’s monthly survey highlighting a lack of sales enquiries and greater competition.

S&P also reported the strongest rate of input price growth since January 2023.

Overall, the index reached 46.4 in March, higher than the 44.6 posted in February but still “well below” the neutral 50.0 threshold, S&P said.

At 38.8, civil engineering was the hardest hit sector, due to “delayed decision-making on new projects and a generally subdued pipeline of major infrastructure work”.

Confidence across the construction sector slipped to its lowest since October 2023.

However, some firms expressed optimism about demand in the renewable energy sector and a potential recovery in infrastructure work.

In addition, the downturn in housebuilding activity eased, “providing a source of encouragement despite ongoing reports of sluggish demand conditions”, S&P said.

Neil Morey, technical director at Thomas & Adamson, part of Egis Group, said: “The current negative trajectory could well remain for a couple more months, but provided planned investment in infrastructure, housing and the energy transition are made soon there are still reasons to retain optimism longer term.”