Glenigan has released the November 2023 edition of its Construction Review, focusing on construction performance leading up to October 2023
The review examines construction performance across major projects (exceeding £100m) and underlying projects (below £100m).
The Review analyses year-on-year construction data, providing perspective on sector performance over the past 12 months.
The November Review showed a consistently weak performance in construction starts, reflecting the industry’s challenges in the current economic environment.
Project starts have fallen since last year
Project starts dropped by 27% compared to the previous three months and saw a 59% decline from the same period last year. Main contract awards decreased by 27% and fell by 51% compared to the 2022 figures.
More positively, detailed planning approvals experienced a 1% increase during the three months ending in October, showing a 17% growth compared to the previous year.
“High-interest rates and a persistently sluggish economy are continuing to depress consumer and investor confidence, resulting in lower levels of activity across most of the private sector,” said Glenigan’s economic director, Allan Wilen.
“The downturn in public sector project-starts is particularly concerning, pointing to ongoing challenges for government departments in prioritising capital projects, despite a significant rollover of capital underspends from the previous financial year,” he continued.
Performance by sector
The sector and regional index show a decline in project performance. Residential starts-on-site fell by 23%, 30% lower than a year ago. Private and social housing declined, with decreases of 25% and 30% in the three months to October and drops of 22% and 46% compared to the previous year.
In non-residential sectors, project starts dropped during the three months to October.
Industrial performance fell by 32%, retail by 3% against the preceding three months and 36% against the previous year.
Office starts decreased by 8%, standing 39% down on 2022 levels. Health, education, Community & Amenity, and Hotel & Leisure experienced significant declines.
Civil performance fell by 18%, 36% lower than a year ago. Infrastructure starts dropped by 15%, remaining down 38% on the previous year’s figures.
Poor utility activity contributed to the decline, with starts decreasing by 22%, 32% lower than last year.
Construction performance by region
Most areas of the UK had weak project-start performance leading up to October. The West Midlands and London saw 27% and 19% decreases, falling 43% and 36% behind the previous year.
The South West (-7%) and the South East (-25%) had poor performance compared to the three months prior, dropping by 29% and 25% against the year before. The East Midlands saw the worst performance, with project starts falling by 22%, 44% lower than last year.
The North East and East of England experienced declines of 31% and 34%, remaining 21% and 31% down on last year. Northern Ireland and Wales project starts fell by 45% and 21%, down 52% and 23% compared to a year ago. Scotland also saw a decline of -2%, dropping by 38%.
“Our recent Construction Forecast anticipates industry recovery in 2024, with starts expected to grow 8% next year. The recent surge in planning approvals offers a small glimmer of hope, with the potential to provide plenty of opportunities for agile contractors over the coming years,” concluded Allan Wilen.
