Construction Sector Suffering from ‘Restricted Market’
David Morris, a construction lawyer and Partner at Knights, has described the UK construction industry as operating in a “restricted market” after an eighth consecutive month of falling activity.
His comments coincided with the release of the S&P Global UK Construction Purchasing Managers’ Index. The August 2025 reading of 45.5 was an improvement on July’s 44.3, which had been the weakest figure in five years, but it remained below the 50.0 mark that separates growth from contraction. Every month of 2025 so far has been below that level, making this the longest run of decline since the Covid outbreak in 2020.
Morris reports a clear increase in disputes, most of them about non-payment, typically arising from questionable deductions or genuine delays. He notes that service costs are still high and in some cases rising, while property prices have largely flatlined, squeezing yields, particularly for SMEs.
As a result, he says parties are becoming more cautious in their contracts, negotiations up and down the supply chain are taking longer, and more parties than ever are walking away from deals or tabling very different terms. He also points to global market volatility and delays linked to the Building Safety Regulator as further pressures.
Despite the tight conditions, Morris stresses that plenty of projects are still progressing and that there is work available for those prepared to take it on.
Source: Construction Industry News Magazine, original article (8 September 2025)
