Market Intelligence Reports

Overview

UK Construction Market Q3 2025

The UK construction sector continues to show cautious signs of recovery in Q3 2025, with a 1.4% increase in tender workloads quarter-on-quarter and 1.8% year-on-year. Growth is evident in residential trades such as brickwork and windows, while concrete frames and drylining have seen declines due to sustainability pressures and rising material costs. The easing of delays caused by the Building Safety Act has supported project progression, particularly in steelwork packages, though subcontractors remain selective in bidding to manage risk.

Building costs rose by 1.7% this quarter, aligning with inflation forecasts and remaining below national averages across most packages. Drylining continues to experience material price volatility, and window fitters are seeing increases in glass prices. The sector is closely monitoring the UK Government’s Spend Review, which may influence future public sector activity.

Employment increased slightly by 0.3%, maintaining a stable labour market. However, year-on-year growth remains flat, with insolvencies in drylining contributing to a 4.3% drop in employment within that package. Suppliers are realigning their strategic goals with market conditions, impacting hiring trends.

Material availability has improved marginally, with lead times shortening by 0.2 weeks. Most trades report stability, though brickwork and drylining have flagged potential shortages due to rising costs, posing risks to residential project delivery.

Looking ahead, the national forecast to Q3 2026 suggests moderate growth across the sector:

• Tender Workload: +5.1%
• Building Cost: +3.9%
• Employment: +2.7%
• Material Availability: +0.8 weeks

Despite this positive outlook, challenges remain. Construction insolvencies, local government reorganization, and constrained public sector budgets are expected to impact project pipelines. The tower crane package in London has been particularly affected by planning delays, though easing bottlenecks are supporting increased activity in steelwork. Inflationary pressures are expected to persist, with construction inflation forecasted between 2.1% and 2.4% over the next year. Employment growth is expected to be strongest in the concrete package (+4.0%), while groundwork and steelwork may see below-average increases.

Overall, Q3 2025 reflects a cautiously optimistic market, with opportunities for growth tempered by external risks and sector-specific imbalances.

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Overall, while the market shows resilience and signs of recovery, stakeholders must navigate a complex landscape of regulatory, economic, and supply chain challenges. Strategic procurement, proactive risk management, and adaptability will be key to capitalising on emerging opportunities through the rest of 2025.