Construction sentiment belies wider economic indicators
At the start of the year, we were optimistic that we had turned a corner and were seeing the dawn of a market recovery. Tariffs, conflict, and negative political rhetoric have since dominated the airwaves, with a tangible impact on business and investor confidence. But are things really as bad as they seem?
If we compare a number of economic indicators to twelve months ago, the situation in some areas has improved more than it has declined. Base rates are down, construction GVA has moved from negative to positive territory, and exports have seen stronger-than-expected growth. As a consequence, the British Chambers of Commerce revised its previous GDP forecast from 1.1% to 1.3%. However, against this backdrop, the UK construction PMI remains in negative territory, albeit the rate of contraction continues to moderate. This also correlates with the latest reading from the Savills Build: Perspective index, which, after a period of stability, contracted sharply in Q3 2025, suggesting that some sectors are starting to see drops in both build costs and programme length. With the next UK Budget now pushed back until the end of November, it is difficult to see how sentiment improves in the fourth quarter. However, with economic data continuing to surprise on the upside, we expect sentiment to improve as 2026 progresses.
