Pre-Budget jitters are taking a toll on the construction industry, suggests the latest analysis from Glenigan, with the organisation reporting project starts, planning approvals, and contract wins all down in the last quarter.
In the September edition of its Construction Review, covering the three months to the end of August, Glenigan says that work commencing on site dipped 7% against the preceding three months. With a combined value of £9.7bn, this performance stands flat compared to a year ago.
Glenigan attributes this decline to a “significant drop” in major project-starts, which fell back 23% against the preceding three months, despite increasing 13% compared to 2023.
Conversely, underlying project-starts were down on the previous year despite inching up (+7%) on the preceding three months.
Main contract awards also faltered on the preceding three months’ performance, declining 21% in the three months to August to stand 7% lower than the same time last year.
Detailed planning approvals plummeted 37% against the previous year, as well as falling back 11% against the preceding quarter.
Yuliana Ivanykovych, Glenigan’s senior economist, said: “The UK construction industry is showing signs of recovery, with a rise in private housing and infrastructure starts underpinning a 7% starts increase compared to the preceding three months.
“Confidence is returning to the private residential market, which will come as good news for investors and developers alike. However, we must be mindful of the sluggish growth of the national economy, with recent flatlining GDP figures indicating that market caution still reigns supreme.”
She added: “The recent strong spell for infrastructure may not last, especially as we’ve registered a slowdown in major projects, despite their value growing year-on-year. This may be caused by short-term sector trepidation as contractors await clarity from the government’s Autumn Budget.”
The sector-specific and regional index, which measures underlying project performance, saw modest growth during the three months to the end of August 2024.
Residential construction remained a bright spot, with underlying project-starts increasing 22% on the preceding three months, despite an 8% dip year-on-year.
Private housing developments saw a robust 30% rise as investor confidence improved, although these figures still lag 4% behind last year’s numbers.
Meanwhile, social housing starts remained sluggish, down 4% against the preceding three months to stand 21% below last year.
Civils work starting on-site is said to have experienced a particularly healthy period, posting “impressive” performance scores, rising 18% against the preceding three months and standing 9% up on the previous year.
This growth was largely attributed to impressive performance in the infrastructure vertical, with starts up by 31% against the preceding three months and by 36% compared with a year ago. A key contributor to this growth was the commencement of the new HS2 station at Old Oak Common in London.
However, these positive scores were tempered by sluggish utility starts, which decreased by 3% against the preceding three months to finish 23% down against the previous year.
Image credit: SFIO CRACHO/Shutterstock
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