UK Construction and Law

Construction output falls for a third month while new orders drop 11.8 per cent in the second quarter

By Staff Writer  |  14 August 2026

Figures published on 13 August put monthly output down 0.1 per cent in June, the third fall in a row, and total new orders down £1,232m on the quarter. The order figure is the one that decides what there is to price next year.

Construction output in Great Britain fell by 0.1 per cent in June 2026, according to figures published by the Office for National Statistics on 13 August. That follows a fall of 0.8 per cent in May and a fall of 0.1 per cent in April, so the series has now declined in three consecutive months.

The June decrease came entirely from new work, which fell by 0.3 per cent. Repair and maintenance recorded no growth at all, at 0.0 per cent.

The quarterly figures point the other way. Total output grew by 0.3 per cent in the second quarter of 2026 against the first, with new work up 0.4 per cent and repair and maintenance up 0.2 per cent. Five of the nine sectors grew, and the largest positive contribution came from infrastructure new work, up 1.9 per cent. The statisticians attribute the fall into April to a particularly strong March rather than to a collapse in April itself.

Total new orders fell by 11.8 per cent, or £1,232m, in the second quarter against the first. That is the figure a commercial team should be reading, not the monthly output line.

Orders, not output

Output measures work already on site. Orders measure work that has been secured but not yet built, so they describe the pipeline a contractor will be resourcing and pricing over the next eighteen months. A quarterly fall of that size in the order book is a warning about 2027 rather than a comment on the summer just gone.

The quarterly decrease came mainly from private commercial new work and public other new work. Construction output prices rose by 1.9 per cent in the twelve months to June 2026, which is a modest rate by the standards of the past four years and gives contractors little room to recover a mispriced tender through inflation.

Developers can usually work around delay. What they find much harder is planning around uncertainty. If you can't price the planning risk with any confidence, it's very difficult to justify tying capital up for two or three years.

Neil Leitch, Managing Director of Development Finance, Hampshire Trust Bank

What a thin order book does to a contract

A shrinking pipeline changes bidding behaviour before it changes anything else. Tender lists lengthen, prices tighten, and contractors accept risk allocations they would have refused in a fuller market. Programme float disappears from bids, provisional sums are priced optimistically, and design responsibility is taken on without the time to interrogate the information behind it.

The consequences arrive later, and they arrive as claims. A job priced on an assumption that does not survive contact with the ground produces variations, extension of time applications and loss and expense claims, and the party carrying the risk usually discovers which party that is only when the first notice is served.

The second consequence is credit. Thin order books and thin margins are what tend to precede failure in the supply chain, and that should sharpen the ordinary protections: check the covenant behind the name on the contract, look at whether parent company guarantees or bonds are in place and enforceable, keep retention and payment records in a state where they can be proved, and treat a subcontractor asking to be paid early as information rather than as a nuisance.

What to watch next

One quarter of falling orders is not a trend, and the two indicators are currently telling different stories: quarterly output up, monthly output down, orders down sharply. The infrastructure figure is the one holding the total up, which is consistent with the pattern of the past two years, where water, energy and defence work has carried the industry while private commercial and private housing have not.

The next monthly release will show whether June was the bottom of a shallow dip or the start of something that the order book has already seen coming. Anyone with a tender in for 2027 work should assume the second and price accordingly.