Construction activity continued its steady recovery in the second quarter of 2025, according to the latest Construction Index published by Glenigan. The report, covering the three months to the end of May, tracks all underlying project-starts valued up to £100m, with seasonally adjusted figures providing a detailed picture of sector trends.
The June Index shows a notable improvement across several key indicators. Project-starts rose 25% over the previous three-month period and were up 10% compared to the same period last year. These figures build on gains reported in the April and May editions, reinforcing signs that momentum is returning to the industry following a prolonged period of uncertainty.
Residential construction once again drove growth, with project-starts rising 39% compared to the previous quarter and increasing 45% on the year. Private housing starts climbed 55% over the previous three months and were up 56% against 2024 figures. Social housing also saw gains, with a 29% rise quarter-on-quarter and a 13% year-on-year increase.
Performance in the non-residential sector was mixed. Although total output was down 18% compared to 2024, activity remained flat against the preceding quarter, suggesting a degree of stability amid ongoing economic challenges. Offices grew by 8% over the quarter but remained 6% below last year’s level. Hotel and leisure saw a 10% increase quarter-on-quarter, though it was still 4% lower than in 2024.
Other segments posted weaker results. Retail dropped 14% on the previous quarter and 26% on the year. Education performed similarly, falling 10% compared to the previous three months and 52% year-on-year. Community and amenity projects declined 6% both quarterly and annually. The health sector followed suit, down 15% over the quarter and 11% compared to last year.
Civil engineering continued to contract, though the rate of decline slowed. Overall civils work dropped 2% on the quarter and 33% year-on-year. Infrastructure starts fell 1% and 28%, respectively, while utilities declined by 2% on the quarter and 38% year-on-year.
“The industry will welcome these results as, despite the downturn in major projects recently shown in the May Review, the underlying market, which represents the majority of work across the sector, appears to be on the up," comments Glenigan's economic director Allan Wilen.
"Perhaps a higher degree of ‘relatively’ good news business stories coming from Downing Street is giving many investors that boost they so desperately needed to get building. Certainly, if the very strong figures in the residential vertical are anything to go by, we’ll likely see the curve continue to rise into H.2 2025,"
He added, “Of course, the much-anticipated Spending Review is revealed this month and should have an interesting effect on industry confidence. Coming out just shy of our own Spring/Summer Forecast these two documents should offer a fascinating indicator of the future direction of activity across UK construction.”
Regional performance varied across the country. The South West recorded a 27% quarterly rise and a 24% increase on the year. In the North West, project-starts rose 58% on the previous quarter and edged up 1% annually. The South East climbed 30% quarter-on-quarter but dipped 2% on the year, while London also rose 30% and recorded a 2% annual gain.
The North East saw a 21% rise over the previous quarter and a 10% increase on the year. The West Midlands reported a 34% quarterly uplift and was 11% higher than the same period in 2024.
