Construction growth was driven by major projects – valued at £100m or more – during the second quarter of 2024, according to market analysis by Glenigan.
According to the July 2024 edition of the company’s Construction Review, these experienced a 91% increase in value compared to the same period in 2023. However, the sector’s fortunes weren’t all enjoying an upwards trajectory.
Detailed planning approvals sank by 21% compared to last year; a result of sluggish demand and pre-election caution, Glenigan says. Main contract awards also suffered a fall in activity, down 34% on the previous quarter.
Nonetheless, Glenigan says these latest results indicate strong construction start performance during Q2 2024, especially when compared to the previous year’s data.
Averaging £9.2bn per month, work starting on site in the three months to the end of June decreased 13% against the preceding three months, but grew by the same amount compared with last year.
This boost was attributed to a massive spike in major project-starts, which rose dramatically, increasing 91% compared to 2023. However, this impressive result was tempered by lacklustre performance from underlying project-starts which dipped 2% during the three months to June and 19% on the previous year.
Allan Wilen, Glenigan’s economic director, said: “Project-starts are finally overtaking last year’s levels, a sign that the industry is starting to move in the right direction, buoyed by a substantial uptick in major projects. Despite being lower than Q1, returning socio-political stability will hopefully make for a strong Q3 when it comes time to make the comparison later in the year.”
Main contracts awards fell 34% against the previous three-month period, and 32% against 2023 levels. Digging deeper, major contract awards experienced a significant slump, standing 55% lower than Q1 and 38% lower than the same time last year. Similarly, underlying contract awards also fell, declining 16% against the preceding period and 30% compared to 2023 levels.
It was a similar story for planning approvals, Glenigan says; down 19% against Q1 and 21% on a year ago. Major planning approvals fell 43% against the preceding period, with the value decreasing by 40% on last year. Underlying planning approvals increased a modest 1% on the preceding three months, but finished 7% lower than the same period in 2023.
Wilen added: “The downward trend in approvals could signal a potential stalling in construction activity, to be expected due to the impact of the recent General Election and the usual summer slowdown.
“However, I’d expect a gradual easing in interest rates over H2 2024 and greater stability as the new government settles in, to create renewed industry confidence and an upturn in demand; good news for the industry. Furthermore, the chancellor’s commitment to reform the NPPF should create opportunities for housebuilders over the rest of the year and into H1 2025.”
The sector-specific and regional index, which measures underlying project performance, saw starts softening across the board. However, there were some pockets of growth in the residential sector and some verticals. A handful of regions also experienced an uptick in activity.
Image credit: Danny Lau/Shutterstock
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