Underlying construction starts fell 11% quarter-on-quarter and 29% year-on-year in the three months to the end of July, Glenigan data shows.
The figures, published in Glenigan’s August 2026 Construction Index, show the sector remains weighed down by domestic and international headwinds, with residential construction the weakest performer and civils the standout, buoyed by an apparent release of Spending Review funding for infrastructure and utilities work.
Glenigan’s Yuliana Ivanykovych said: “Try as it might the sector continues to be held back by external factors beyond its control, with a changing of the guard at the top of government being the latest in a string of extraordinary events. Key barometers such as residential construction remain depressed with little immediate signs of the dial moving before the end of the quarter.
“With the new prime minister keen on hard hats over academic caps, we might yet see some movement here ahead of winter, so I imagine the whole industry will be keenly looking on to see what further policy announcements he makes over the next few weeks.
“However, to slightly temper this optimism, there remains a considerable degree of uncertainty across global markets. Tough economic conditions out of Andy Burnham’s control might dent those ambitions usually achievable in normal economic circumstances.”
Residential construction remained a weak spot, with project starts down 25% against the preceding three months and 46% lower than a year earlier. Private housing starts fell 21% quarter-on-quarter and 49% year-on-year, whilst social housing starts dropped 34% quarter-on-quarter and 38% year-on-year.
Non-residential starts fell 4% quarter-on-quarter and stood 11% below last year’s levels. Offices were the standout, rising 25% quarter-on-quarter and 34% year-on-year – the only vertical to outperform 2025 activity.
Industrial activity increased 30% quarter-on-quarter, supported by a £74m storage and distribution project in Leicestershire, though remained 6% below a year ago. Community and amenity starts rose 18% quarter-on-quarter but were 22% lower than last year.
Retail starts fell 30% quarter-on-quarter and 16% year-on-year, while hotel and leisure activity dropped 4% quarter-on-quarter and 26% year-on-year.
Health activity was broadly stable, down 1% quarter-on-quarter and 4% year-on-year, supported by continued funding from the government’s New Hospitals Programme. Education starts fell sharply, down 42% quarter-on-quarter and 37% year-on-year.
Civils work starting on site rose 34% quarter-on-quarter, though remained 15% below last year’s levels.
Infrastructure starts increased 24% quarter-on-quarter but were 16% down year-on-year, while utilities starts rose 51% quarter-on-quarter and were 14% down year-on-year. Projects including the £74m Culham River Crossing in Oxfordshire and the £68m flood protection scheme in Dumfries contributed to the uptick.
Regional outlook
Regional performance was mixed. The West Midlands recorded the strongest growth, up 23% quarter-on-quarter but down 24% year-on-year, supported by a £53m refurbishment contract let by the West Midlands Police Authority.
The East of England rose 7% quarter-on-quarter but remained 22% below last year, while the South West increased 8% quarter-on-quarter but was down 45% year-on-year. Yorkshire rose 13% quarter-on-quarter, remaining 36% below last year’s level.
London held broadly steady, down 5% quarter-on-quarter but up 1% year-on-year.
The South East fell 27% quarter-on-quarter and 46% year-on-year, Scotland dropped 20% quarter-on-quarter and 31% year-on-year, and Wales declined 37% quarter-on-quarter and 28% year-on-year.
Northern Ireland recorded the steepest fall, down 52% quarter-on-quarter and 22% year-on-year.
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