whereas housebuilding recorded its sharpest contraction of 2026 and civil engineering activity fell at its fastest pace since April 2020. Firms attributed weaker activity levels to subdued housing market conditions, higher borrowing costs, ongoing business uncertainty and delays to project starts.
Figure 3: S&P Global/CIPS UK Construction PMI
KPMG's annual private enterprise barometer found that 83 per cent of the firms it surveyed in the East are confident of second half growth, down slightly on the start of the year but compared to 80 per cent nationally. Two-thirds of firms saw areas such as AI, cyber security and broader digital transformation as key focuses, a 30-percentage point increase since the start of the year. KPMG said it signals how investment is shifting towards practical implementation of tech like AI to improve productivity, efficiency and growth. Meanwhile, nearly two thirds of businesses are looking to expand their service offerings and broaden their client base and over half are turning to their own balance sheets to help fund their growth plans, reflecting a growing preference to retain control.
The outlook amongst private firms in the East of England's improved in June as inflation eased despite a weakening in output, new orders and employment during the month. Input price and charge inflation both eased further to reach three-month lows and overall confidence was the highest since February, before the Middle East war started. Hopes for growth were linked to an end to the war, investment, diversification, marketing, stronger sales pipelines, contract wins and higher exports. But the NatWest East of England growth tracker business activity index fell to 47.4 in June, from 48.9 in May, the first 'back-to-back declines' for over a year. Meanwhile, the rate of job shedding was the fastest since March.
According to BDO's bi-monthly mid-market tracker, most businesses in the region (88 per cent) are hiring for entry level roles within the next six months But many say higher employment costs and labour or skills shortages are one of the top challenges they face. Nearly one-fifth are pivoting to hiring contractors, freelancers or consultants rather