UK Construction Stabilizes While Germany's Sector Deepens Downturn

European construction sectors showed divergent trends in July 2026, with the United Kingdom seeing signs of stabilization while Germany's industry declined. In the UK, the construction Purchasing Managers' Index (PMI) rose to 44.7 from 38.4 in June, beating economist expectations of 40. Although the sector has been in a continuous slump since January 2025—the longest since 2008—the rate of contraction slowed across all categories. Housebuilding activity reached its highest level since October 2025, and commercial work showed the most resilience.

Andy Burnham, Mayor of Greater Manchester, has highlighted these challenges, stating that the country is stuck in a "housing trap," while the UK government is addressing the crisis through a promised council house building program. The UK sector's recovery follows a period of high costs and geopolitical uncertainty linked to the US-Israeli conflict with Iran.

Conversely, Germany's construction sector experienced a deepening downturn, with its PMI falling to 42.1 from 44.8 in June. This decline was primarily driven by the housing and commercial sectors, though civil engineering recorded a renewed increase. German firms reported a continued drop in new orders due to high prices and delayed decision-making, with job losses persisting for six months. In both nations, the rate of input price inflation for materials slowed to its lowest level since February.