Construction Update, September 2026: Slow Output, Big Skills Demand

As of 30 September 2026.

Hard hats on, because September has been a busy month for construction headlines. The output figures are still sluggish, the policy announcements keep coming, and the skills conversation is louder than ever. There's also a healthy pipeline of big projects taking shape. Here's what has happened and what it means for anyone hiring, or looking to be hired, in the industry.

The numbers: still in the slow lane

The latest S&P Global UK Construction PMI, covering August, slipped to 44.3 from 44.7 in July. That marks a 20th month of contraction, with housebuilding the main drag. There was a glimmer of good news elsewhere, though. Commercial and civil engineering gauges improved slightly, and firms shed jobs at the slowest pace since September 2025. The September reading is expected in early October, so keep an eye out for it.

The latest official figures, from the ONS and covering July, tell a similar story. Output was up 0.1% in the month, but that growth came entirely from repair and maintenance, while new work fell 0.4% and private housing new work dropped 4.9%. Output was also 2.3% lower than a year earlier.

Costs remain a headache. The Home Builders Federation says the cost of building a new home has risen by £76,000 since 2020, and one poll pointed to some of the sharpest cost increases in nearly 30 years as the Middle East conflict continues. On a brighter note, the PMI gauge of input prices fell to its lowest level since February.

Big projects: the pipeline is filling up

Here's the interesting bit. Glenigan's September review shows project starts down 49% over the quarter and 28% year on year, yet main contract awards rose 45% over the quarter and 120% year on year. Projects are being signed off, they just haven't broken ground yet. Glenigan puts much of the jump down to major and infrastructure schemes, and says the public sector is doing plenty of the heavy lifting, with health leading and military and blue light projects gathering momentum.

Newly announced and awarded

• A £4.3bn civils framework. Pagabo, working on behalf of YPO, has appointed 109 contractors, including Costain, Galliford Try, Graham, Kier, Morgan Sindall and Skanska. It covers highways, rail, water, energy, aviation, nuclear and defence, and runs from October 2026 to September 2030.
• A £126m A40 scheme in Oxfordshire. The bus lanes and active travel development has reached the detailed plans stage.
• Energy and airport heavyweights. Barbour ABI's latest league table has Gatwick's Northern Runway (£2.2bn) as the UK's top project, followed by the £2bn West of Orkney wind farm and the £1.5bn Outer Dowsing offshore wind farm.
• Lower Thames Crossing. At £10.2bn, Glenigan lists it as the UK's largest scheme, with preliminary works started in March 2026 and tunnelling due to begin in 2028.

Progressing or nearing the finish line

• Watkin Jones has completed Tai Afon in Cardiff. The £200m build-to-rent scheme of 718 homes is ready for handover to L&G.
• Edinburgh's Next National Supercomputer. Robertson Construction has placed the final piece of the structural steel frame.
• HS2. Excavation of all 23 miles of deep-bore tunnels between Old Oak Common and Birmingham Curzon Street is done, and the final major tunnel, from Old Oak Common to Euston, started in January 2026. The civil engineering works on the opening section are due for completion by the end of the decade.
• Staffordshire Police Firearms Training Facility. The £17.6m Morgan Sindall project topped out earlier this year and is targeting completion this autumn.

Policy: big ambition, tough conditions

The government's target of 1.5 million new homes is still the headline ambition, but Angela Rayner has acknowledged there is only a slim chance of meeting it by the next election. Support is arriving in other ways. The new Capacity to Build programme is aimed at councils, and the Local Government Association will provide up to 225 tailored support packages between April 2026 and March 2029.

All eyes now turn to the upcoming October Budget. Industry voices want money deployed quickly into stalled sites that already have consent and could start within the next 12 to 24 months.

Skills: where the real story is

If one theme keeps returning, it's people. CITB estimates the industry needs 41,200 additional workers a year between 2026 and 2030, around 206,000 over five years. Skills England paints an even bigger picture: employment in 30 priority construction occupations needs to grow by 493,000 between 2025 and 2035, a 26% increase, and 20% of those occupations are already in critical demand.

Help is on the way, though not overnight. On 23 September the government set out plans for new vocational GCSEs, with some possibly available from September 2029. Building and Construction is named as a possible subject, alongside a call for 200,000 extra work experience placements for 14 to 16 year olds. There is a catch. The construction qualification hasn't been confirmed, and no syllabus or awarding body has been announced. The CIOB also points out that almost half of young people surveyed said construction wasn't included in the careers advice they received.

What this means for hiring

This is our take, based on the picture above.

The pipeline is building before the starts are. With contract awards racing ahead of starts on site, the crunch for skilled people is likely to arrive when those projects mobilise. Employers who line up talent early will be first out of the blocks.

Civils, infrastructure and energy look set to lead. Frameworks, wind farms, tunnelling and airport works all need site managers, engineers, quantity surveyors and specialist trades, and mechanical and electrical skills will be in demand across the energy and public sector builds.

The market is uneven, so hiring plans should be too. Housebuilding is soft while commercial and civils show early signs of improvement. Businesses that spot where the work is heading will have the edge.

Flexibility is your friend. With output patchy and the Budget still to land, many employers will want the option to scale teams up and down. Contract and temporary resource can bridge the gap while confidence returns.

Retrofit and maintenance are keeping the lights on. With repair and maintenance carrying July's growth, skills in those areas are worth their weight in gold.

Don't wait for the classroom pipeline. A GCSE arriving in 2029 is welcome, but sites need skilled people now. Upskilling, apprenticeships and smart recruitment can't wait.

A quieter market doesn't mean fewer opportunities, it means the right people are harder to find and easier to lose. If you're planning your next move, or your next hire, our team is ready to help.

Hiring? Looking? Get in touch with Caval today.