According to the latest PMI data by S&P and CIPS, the headline construction PMI for September increased slightly to 46.2, up from 45.5 in August. However, the headline index remained below 50 for the ninth consecutive month.

The main contributors to the monthly uptick were housing and civil engineering activity, which rose to 46.8 and 42.9 respectively. Commercial activity saw a slight fall to 46.4.

Kelly Boorman, National Head of Construction at RSM UK, said: “Despite the slight uplift in the headline construction PMI in September, driven by upticks to housing and civil engineering, activity was below 50 for the ninth consecutive month, with new orders also contracting for the same period. Similarly, while housing activity increased marginally, it remained below 50 for the third consecutive month. Given this is typically the busiest quarter for housebuilders, this reflects the ongoing fragility in the housing sector, fuelled by speculation around property tax changes in the Autumn Budget and broader market uncertainty.

“While civil engineering activity saw a slight uptick amid stronger pipelines and awarding of contracts across energy, transport and healthcare, mobilisation delays and gaps in the NISTA framework continue to deter progress. The uptick is also not enough to offset the wider slowdown in housing, particularly as developers remain cautious about stock levels and future completions. As such, we’re seeing housebuilders pulling back on stock volumes due to anticipated weaker returns, alongside mounting pressure from potential tax rises.

“The planning system continues to create a bottleneck, despite pledges to remove red tape earlier in the year. Although Q4 is typically a stronger quarter for housebuilding, the lack of clarity around tax changes in the Autumn Budget is dampening market confidence and stalling activity, further reflected in the subdued number of housing transactions. This indicates a lack of consumer confidence, with affordability challenges persisting, despite mortgage products slowly becoming more accessible.”

She added: “The government must therefore address structural barriers in housing and infrastructure delivery. Clear policy direction, especially around property taxation and planning reform to support housebuilders, is essential to unlock investment and deliver the 1.5m housing target the sector is under pressure to meet.”

Thomas Pugh, Chief Economist at RSM UK and Ireland, added: “The wet weather in September, clearly kept the construction PMI below the crucial 50 mark of no change, suggesting the sector contracted in September.

“However, the PMI, which is consistent with the construction sector shrinking by 1% in Q3, has been far too pessimistic of late as negative sentiment around planning reform and the upcoming budget is weighing on the survey data. We continue to expect the official data to outperform the weakness seen in the surveys.

“What’s more, firms are clearly still dealing with persistent cost pressures as the input prices balance rose again. Yet, the employment balance also remains weak, this matches the trend we see across the broader economy that has forced the MPC to walk a narrow path as they try to balance a weakening labour market with persistently high inflation.”

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