Construction activity remains near a six-year low: what subcontractors should do now

The June 2026 S&P Global UK Construction PMI rose slightly to 38.4 from May’s six-year low of 38.2. Because any reading below 50 indicates falling activity, the survey still points to a severe downturn rather than a recovery. Surveyed construction activity has declined every month since January 2025, while employment has fallen for 18 consecutive months.

The picture is not identical across every measure. Official construction output increased by 1.6% in the three months to May 2026, although monthly output fell by 0.8% in May. The PMI records whether surveyed businesses report improvement or decline, while official output figures estimate the amount of work completed. Together, they show an uneven market in which repair and maintenance work is supporting output while new work and confidence remain weak.

What the latest figures show

Subcontractor use also fell sharply in the June survey. With fewer projects and more competition, subcontractors may face increased pressure over valuations, payment notices, retentions and final accounts. A specialist construction debt collection service can help where an undisputed balance has stalled.

Why payment discipline matters

Your entitlement depends on the contract, payment schedule and notices served. Understanding applications for payment and pay less notices is essential.

Under qualifying construction contracts, the payer must normally pay the notified sum by the final date for payment unless a valid pay less notice is issued within the required period. The precise deadline depends on the contract or the statutory Scheme for Construction Contracts.

Do not assume that every deduction is invalid. A payer may have a genuine valuation argument, defect claim, set-off or counterclaim. Request the calculation and contractual basis promptly, then respond before the disagreement becomes entrenched.

If a main contractor becomes insolvent, an unpaid subcontractor will often rank as an unsecured creditor unless the money is protected through a trust, project bank account or another arrangement. Retentions and unpaid valuations may then recover only a small proportion, or nothing. Acting early is therefore sensible risk management.

Protecting your cash flow

Submit every application on time, using the form and delivery method required by the contract. Keep evidence of submission and maintain clear records of variations, instructions, labour, materials and completed work.

Check the due date, final date for payment and notice deadlines for every payment cycle. When payment is late, use consistent quick fixes for late payment before the account becomes seriously overdue.

The Housing Grants, Construction and Regeneration Act 1996 generally gives parties to qualifying construction contracts a right to adjudication. A party may also have a right to suspend some or all performance for non-payment of a notified sum after providing the required written notice, normally at least seven days. Obtain legal advice before suspending work because the contractual and commercial consequences can be significant.

Watch for the signs you need to act, including broken promises, unexplained contact changes, repeated late notices and disputes raised only after chasing. These indicators help determine when to escalate.

When external recovery becomes appropriate

A third party can introduce structure when internal chasing has stopped working. Taurus has previously recovered a contractor’s long overdue payment from a major construction firm, although every case depends on the contract, evidence and debtor’s position.

A documented recovery process is usually more effective than occasional calls. Outsourced credit control can keep ledgers current, while a credit check before accepting substantial exposure may reveal warning signs. International debt collection may be required where the contracting party or its assets are overseas.

Do not let a downturn become a bad debt

A weak market makes slow payment more dangerous. If a valuation, retention or invoice has stalled, send the contract, applications, notices and payment history to the Taurus debt recovery team for an assessment of the most appropriate next step.