𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

UK builders faced a steep drop in business activity last month as firms were hit by rapidly rising costs, a survey shows.

Experts said construction companies were being squeezed by higher energy prices because of the Iran war.

The S&P Global UK construction purchasing managers’ index (PMI) showed a reading of 39.7 in April, down from 45.6 in March, indicating a steep drop in overall business activity.

A reading above 50.0 indicates that activity is increasing while anything below means it is contracting.

Output has been declining since the start of 2025, and the latest reading was the weakest for five months.

It was partly driven by a sharp drop in activity in civil engineering, while residential house building and commercial work also continued to fall.

The survey revealed that higher fuel prices contributed to a rapid rise in purchasing prices for builders, who said suppliers were passing on higher transportation costs.

This pointed to cost inflation increasing at the fastest rate since 2022.

Firms widely reported that business clients facing uncertainty from the Middle East conflict was delaying spending decisions and leading to fewer opportunities for work.

Tim Moore, economics director at S&P Global Market Intelligence, said: “A rapid acceleration of input cost inflation was seen across the UK construction sector in April.

“Aside from the post-pandemic surge in input prices from early 2021 to mid 2022, the latest rise in purchasing costs was the steepest in three decades of data collection.

“Around two-thirds of the survey panel reported higher cost burdens in April, which was overwhelmingly linked to fuel surcharges and subsequent rises in raw material prices.

“Adding to supply chain challenges, the latest data also indicated longer wait times for the delivery of construction items due to international shipping delays.”

Atul Kariya, head of real estate and construction for accountancy firm MHA, said: “Today’s construction PMI underlines a sector still being heavily squeezed by weak demand and renewed cost inflation, with rising energy prices due to the conflict in the Middle East adding fresh pressure to an already fragile situation.

“Higher build costs, tighter viability and interest rate uncertainty are making land buying, tendering and project timing harder to judge.

“As a result, there is a growing risk that decisions will be postponed until pricing and borrowing costs stabilise.”