Construction output growth accelerated in March despite impact of Iran war, official figures show

Construction output growth is estimated to have accelerated in March despite the impact of the Iran war, the latest official figures show.

Output grew by 1.5% in March compared to 0.5% in February and 0.7% in January, according to the Official for National Statistics (ONS).

The Middle East conflict, which began with attacks by the US and Israel on Iran on 28 February, has been blamed for softening confidence in the industry due to a rise in energy and material costs and increased global uncertainty.

But the ONS said output in the first quarter of the year grew by 0.4% compared to the last quarter of 2025, led by a 3.4% growth in repair and maintenance.

The rise in monthly output seen in March came from increases in both new work and repair and maintenance, which grew by 2.0% and 0.8%, respectively.

However, total construction new orders crashed by 10.5% in the first three months of this year compared to quarter 4 2025 with the fall mainly coming from private commercial and infrastructure work.

At the sector level, four out of the nine sectors grew in quarter 1 2026 with the main positive contributor being private housing repair and maintenance, which grew by 4.1%.

Clive Docwra, managing director of property and construction consultancy McBains, said today’s figures “will give further heart to the industry”.

“Overall growth of 1.5% in March is much better than expected given that these figures cover the first full month after the outbreak of the Iran war, while new work such as private housing increasing by 2.8% and commercial orders by 3.4% during the month are particularly pleasing,” Docwra said.

However, he added that rising inflation and continued uncertainty over the future of the Iran conflict “will continue to have an impact in terms of sluggish demand over the coming months”.  

Docwra also said the current uncertainty about the future of Keir Starmer and any policy change which could come with a change of prime minister could worry investors.

“Even the recent local election results could also have a bearing on projects going ahead – as witnessed by reports that the new local council in Enfield may shelve plans for the shortlisted new town,” he said.

Richard Cook, senior economics director at Pegasus Group, warned that the ongoing conflict in the Middle East is having a “damaging effect on the UK economy which isn’t yet reflected in these figures”.

But he said rising output in March is a sign that the UK construction sector can return to health in the long-term, pointing to the continued government commitment to build 1.5 million homes this Parliament as factors offering longer term stability.