UK Construction Market Insight | September 2026
Subcontractor use rises as contractors stay cautious on permanent hiring
Construction firms increased their use of subcontractors for the first time in almost two years during August, as employers continued to keep permanent headcount under pressure.
Market overview
A difficult market, but an interesting shift in hiring
The S&P Global UK Construction PMI recorded 44.3 during August 2026, compared with 44.7 in July.
Overall construction activity remained below the neutral 50 mark, with housebuilding continuing to experience the greatest pressure. But underneath the headline figure, workforce behaviour started to change.
August Construction PMI
Since subcontractor use last increased
Smallest fall in new orders
The labour picture
Contractors turn back towards flexible labour
Permanent employment continued to fall during August, but the pace of job losses eased to its lowest level since February.
At the same time, construction businesses increased their use of subcontractors for the first time in almost two years.
The figures suggest contractors still need skilled people to deliver live projects, but many remain cautious about increasing permanent overheads while project pipelines remain uncertain.
The number to watch
Subcontractor usage increased for the first time in almost two years.
For contractors managing changing workloads, access to temporary and contract resource is becoming increasingly relevant.
Sector snapshot
Housebuilding remains under the greatest pressure
Performance remained mixed across the three main areas of construction.
37.6
Housebuilding
Residential construction remained the weakest performing part of the market during August.
47.8
Commercial
Commercial construction moved closer to stabilisation and recorded the strongest result of the three sectors.
40.5
Civil Engineering
Civil engineering activity remained in decline, although the rate of contraction eased.
Project pipeline
New orders are still falling, but at a slower rate
New business declined again during August, but the reduction was the smallest recorded since September 2025.
The improvement does not signal a full market recovery, but it does suggest parts of the industry are moving closer towards more stable demand conditions.
For contractors
Workforce flexibility is moving back into focus
01. Keep access to skilled people
Changing workloads mean contractors still need access to qualified workers without always increasing permanent headcount.
02. Prepare for short notice requirements
Project wins, programme changes and replacement labour often create requirements faster than internal recruitment processes allow.
03. Stay flexible
Temporary, contract, permanent and temp to perm recruitment give employers different options as workloads change.
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Source: S&P Global UK Construction PMI, August 2026.
