Construction output falls 0.7% in third quarter as price inflation climbs to 3.2%

Construction output in Great Britain fell by 0.7% in the third quarter of 2026, the Office for National Statistics (ONS) said on 12 November, as a 4.7% drop in private new housing outweighed a rebound in September.

The ONS said new work fell by 1.6% over July to September while repair and maintenance grew by 0.5%. Five of the nine sectors declined, with private new housing the main negative contribution.

Monthly output rose by 0.8% in September, the first increase after four consecutive monthly falls. The ONS said both new work and repair and maintenance grew, by 0.9% and 0.6% respectively, with infrastructure new work up 3.3% the main driver of the new work rise.

For cost and procurement teams, the price data may matter as much as the volume data. The ONS put the annual rate of construction output price growth at 3.2% in the 12 months to September 2026, up from 1.9% in the 12 months to June reported in its Quarter 2 bulletin.

The quarter in figures

Measure, Q3 2026 vs Q2 2026	Change
Total construction output	-0.7%
New work	-1.6%
Repair and maintenance	+0.5%
Private new housing	-4.7%

Source: ONS

New orders

Total construction new orders grew by 1.2%, or £107m, in the third quarter compared with the second, according to the ONS. The increase came mainly from public other new work and private commercial new work.

That follows a fall of 11.8%, or £1,232m, in new orders in Quarter 2 compared with Quarter 1, which the ONS said in August was driven mainly by private commercial and public other new work.

The ONS also reported in August that total output grew by 0.3% in Quarter 2, with infrastructure new work the main positive contribution.

Revisions to July and August

The September bulletin revises the monthly path through the summer. The ONS's August bulletin, published on 15 October, put the July fall at 0.5% and the August fall at 0.2%. The September bulletin now estimates July fell by 0.2% and August by 0.5%.

Construction data in the ONS's monthly GDP estimate come from its Monthly Business Survey, which collects output by sector from construction businesses in Great Britain.

The ONS said the survey turnover response rate for September was 76.6%, following first estimate response rates of 85.4% in August and 80.0% in July. It has not applied a bias adjustment to construction output since May 2020 while it reviews the approach.

Wider economy

The GDP bulletin put UK growth at 0.7% in the three months to September, with the 0.7% fall in construction partially offsetting growth elsewhere. Monthly GDP grew by 0.2% in September after no growth in August, and the ONS said all three sectors of the economy grew in the month, with construction up 0.8% and services up 0.2%.

Surveyors' view

The ONS data lands a week after the Royal Institution of Chartered Surveyors (RICS) published its Q3 2026 UK Construction Monitor on 5 November. RICS said its headline workloads net balance fell to -7% from -4% in Q2, a sixth consecutive quarter in negative territory.

Private housing was the weakest sector in the RICS survey, with its workloads net balance falling to -18% from -12%. Infrastructure went the other way, rising to +18% from +16%, which RICS said was the strongest reading in eight quarters.

Simon Rubinsohn, RICS Chief Economist, said: "RICS data continues to show the financial pressures on housebuilders as the key factor holding back development".

RICS respondents expect materials costs to rise by 6.5% over the next year, overall construction costs by 5.8% and tender prices by 5.0%. Financial constraints and planning and regulation were each cited by 62% of respondents as factors limiting activity. The net balance for credit conditions over the next three months fell to -36% from -21%, and profit margin expectations deteriorated to -13% from -10%.

Forecasts

The Construction Products Association (CPA) forecast in its Summer 2026 outlook that total construction output would fall by 3.3% in 2026 before rising by 1.2% in 2027, with risks remaining heavily on the downside.

The CPA expects private housing output to fall by 10.0% in 2026, revised down from -7.0% in its Spring forecast, and private housing repair, maintenance and improvement to fall by 8.0%. It expects infrastructure output to rise by 3.2%.

Rebecca Larkin, CPA Head of Construction Research, said "there is an increased risk that rising cost inflation eats into the volume of construction work" even where values are maintained.

The ONS figures are accredited official statistics reviewed by the Office for Statistics Regulation. The next construction output release is due on 11 December 2026.