The construction industry’s journey to recovery post-pandemic has been well documented, with the ongoing financial pressures the latest in a series of hurdles that the industry is having to face. With the Glenigan Construction Review recently publishing its data for November to January, we take a closer look…
It’s no secret that high interest rates and a stalled economy are continuing to have a considerable impact on businesses and industries country-wide, especially with regards private sector investment. The economy shrank by 0.2% during the three months to November, according to data from the Office for National Statistics (ONS), and it was officially announced on 15 February 2024 that the UK is in a technical recession.
Over the three-month period from November to January, there was a 31% decline in project starts and a 21% decline in contract awards, compared to the same period in 2023. The private residential, industrial and commercial sectors experienced the sharpest drop in project starts, with a decline in public sector areas (including health and education) also contributing to the drop.
That said, there are slow signs of growth and a renewed momentum, which offers a promising outlook for the months ahead. Planning approvals are up 18% and there has been a clear increase in main contract awards compared to the three months previous. The CIPS services survey also recorded a marked improvement in business activity in January, with both output and new orders improving, resulting in improved consumer confidence. While people are still cautious about the UK economic prospects, expectations have generally improved about their own financial position over the next year. Change is coming.
Location, Location, Location
While the North East and East Midlands stood strong in terms of project starts value, London is unsurprisingly the most popular geographical location for detailed planning approvals across a range of sectors, including housing, offices and healthcare. The capital city also accounted for a huge 62% of the total value within the commercial office sector, including the iconic £500million 2 Finsbury Avenue development – keep an eye out for the Mabey Hire case study, coming soon!
Civil Engineering
It's also positive to see the civil engineering sector having a positive impact on the UK economy. While project starts fell 31% against the same period in 2023, major projects (defined as £100million+) grew 30% against the previous three months. That’s not all, with main contract awards also increasing by a strong 219% compared to the last three-month period, finishing at a 73% increase compared to 2023.
Road projects accounted for the greatest share of civil engineering starts (38%), followed by investment in our country’s rail infrastructure at 32% - marking transport as a clear area of focus for local authorities and agencies. Interestingly, it’s the East of England that stands out as the main hub of activity for civil engineering projects, accounting for 29% of starts and a huge 52% of all planning approvals.
