At a Glance: UK construction PMI stayed in contraction at 45.6 in March, with housing the clear weak spot and new orders falling sharply. 🏗️
At a Glance: Cost inflation hit its steepest pace in nearly 30 years, driven by fuel, transport and raw material pressures linked to Middle East supply disruption. 💰
At a Glance: Infrastructure and civil engineering continue to outperform building, with a £718bn national pipeline and an infrastructure index forecast well above housing. 🚆
At a Glance: Policy moves – from the Building Safety Levy to devolution and NPPF reform – are set to reshape risk, viability and governance on new residential schemes. 🏛️
At a Glance: Contractors face tightening margins as tender prices rise on cost pressure while demand stays subdued, even as optimism builds around energy and major projects. ⚙️
Today’s update: new data confirm a construction market still in recessionary territory, with residential leading the downturn even as infrastructure work and the national pipeline provide a counterweight. Policy and regulatory changes – notably the Building Safety Levy and planning reform – are becoming just as important as demand in determining which schemes move. Here’s what you need to know to stay ahead today.
Ongoing Stories
Following earlier coverage of strains in the UK construction pipeline, new March PMI data show ongoing contraction at 45.6, with housing activity particularly weak and new orders falling at the fastest rate since late 2025, reinforcing concerns over delivery capacity despite a large project backlog. (Source: Bricks & Bytes; Arcadis)
Returning to the theme of delivery-focused reform of major schemes, the latest update to the national infrastructure pipeline and the Government Major Projects Portfolio (GMPP) consolidation to c.80 priority projects signal a continued pivot toward concentrating resources on fewer, larger programmes. (Source: Project Delivery UK; GOV.UK)
Top 5 Headlines
🏗️ Construction PMI points to 15th straight month of contraction
The UK construction PMI registered 45.6 in March 2026, remaining below the 50 growth threshold for the 15th consecutive month, albeit improving slightly from 44.5 in February. Residential activity was particularly weak, with a housing PMI of 38.2, while new orders fell at their steepest rate since late 2025. This entrenched downturn highlights mounting delivery risk in housing and commercial projects, even as some infrastructure work holds up. (Source: Bricks & Bytes)
💰 Cost inflation hits near 30-year high as supply shocks bite
March saw sharp cost inflation across the construction sector, reported as the steepest in nearly three decades. Rising fuel, transport and raw material prices – linked in part to Middle East conflicts and supply chain disruption – are pushing tender prices higher and eroding contractor margins. The combination of cost spikes and falling new orders intensifies pricing and risk pressures across live bids and framework agreements. (Source: Arcadis; Constructionline)
🚆 £718bn national infrastructure pipeline underpins medium‑term workbank
The government’s March 2026 update to the national infrastructure pipeline lists 734 projects worth £718bn, spanning hospitals, schools, rail, reservoirs and clean energy. Major schemes include HS2 test section works backed by £25.3bn to 2030, the £10bn Lower Thames Crossing, East-West Rail expansion, Hinkley Point C and Northern Powerhouse Rail, plus offshore wind, solar, battery storage and data centres. This depth of committed and planned work offers a crucial counterbalance to weakness in traditional building markets and shapes where capacity and investment will be needed. (Source: Project Delivery UK; Glenigan)
🏛️ Building Safety Levy and planning reforms set to reshape residential delivery
The Building Safety Levy will apply from 1 October 2026 to new residential developments in England with 10 or more units, funding building remediation while adding a new cost line for schemes. In parallel, government consultations on NPPF reform and the English Devolution and Community Empowerment Bill are progressing, aiming to boost housing delivery, increase transparency and devolve some planning powers to strategic authorities. Together, these measures will alter viability calculations, land strategies and approval routes for residential developers over the next 12–24 months. (Source: PBC Today; MHCLG)
💰 Market outlook: new orders fall, but infrastructure and rate hopes lift sentiment
Construction new orders declined sharply in March, reflecting subdued demand across most building sectors, while tender price escalation continues as contractors pass through higher input costs. However, industry surveys point to early signs of optimism tied to energy infrastructure schemes and expectations of interest rate reductions later in 2026. For investors and delivery teams, this suggests a bifurcated market: constrained near-term workloads in housing and commercial, versus more resilient opportunity in public and energy-led infrastructure. (Source: Arcadis; Constructionline)
Also in the news
🏗️ Housing market indicators show rising prices, new supply at an 11‑year high and rental yields above 8% nationally, even as residential construction activity and new orders remain under pressure. (Source: Brookbanks; Clyde & Co)
🏗️ The 2026 Budget maintains a £39bn commitment to affordable housing, providing a medium-term funding backdrop for registered providers and delivery partners amid tightening development economics. (Source: Brookbanks)
🚆 GMPP reforms effective from 1 April 2026 have reduced the portfolio from 200+ schemes to around 80 focused priorities, concentrating Whitehall oversight on fewer, larger projects. (Source: GOV.UK)
🌱 Infrastructure and civil engineering output is forecast to reach an index of around 128 in 2026 (2020=100), significantly outperforming private housing at 94 and reinforcing a structural shift toward infrastructure-led workloads. (Source: Arcadis)
⚙️ New builds account for roughly 74% of UK construction project market value, indicating that, despite contracting demand, ground-up schemes remain the dominant work-type for the industry. (Source: Arcadis)
The Daily Build is written for people shaping the UK’s construction and infrastructure pipeline, from boardrooms to site offices. If this briefing is useful, consider forwarding it to a colleague reviewing bids, budgets or programmes this week.