UK Construction Sector Sees Modest Growth in August Amidst Economic Headwinds

The UK construction industry experienced a slight uptick in output, growing by 0.3% in the three months to August 2025, according to the latest figures from the Office for National Statistics (ONS). This modest expansion comes despite ongoing economic uncertainties and challenges within the sector, including low planning approvals and rising costs.

Key Takeaways

Total construction output grew by 0.3% in the three months to August 2025.
New work saw a decrease of 0.4% over the same period.
Repair and maintenance activities increased by 1.3% in the three-month period.
Monthly output in August fell by 0.3% after a flat July.

Sector Performance

The ONS data reveals a mixed performance across the construction sectors. While overall output saw a marginal increase, new work experienced a decline of 0.4% in the three months leading up to August. Conversely, the repair and maintenance segment demonstrated stronger growth, rising by 1.3% during the same timeframe. At a more granular level, five out of the nine tracked sectors reported growth. The primary driver for this expansion was the private housing repair and maintenance sub-sector, which surged by an impressive 5.6%.

Monthly Fluctuations

On a month-to-month basis, construction output contracted by 0.3% in August 2025, following a period of no growth in July. This monthly decrease was attributed solely to a 1.5% fall in repair and maintenance activities, as new work saw a positive monthly increase of 0.5%.

Industry Reactions and Outlook

Industry experts have offered a cautious perspective on these figures. Neil Leitch, managing director of development finance at Hampshire Trust Bank, described the growth as a “welcome surprise” given the prevailing challenges, such as record low planning approvals and a halving of approvals for small sites. He highlighted the unsustainability of current constraints, which hinder new home delivery and threaten government pledges.

Clive Docwra, managing director at McBains, noted that the figures reflect a subdued economic picture. He pointed to investor caution regarding new project spending due to persistent economic uncertainties. While new work orders saw an increase in August, many developers are expected to postpone plans until after the upcoming Budget, seeking further incentives to stimulate building activity.

Suggestions for boosting the housing market include abolishing stamp duty and reforming council tax to reduce barriers to moving and inject confidence into the sluggish housebuilding sector. The industry is looking to the Budget for measures that will support planning departments, enhance local delivery capacity, and attract talent to construction, ultimately aiming to address the shortfall in new homes and regional delivery gaps.