Construction starts tumble as sector suffers ‘general decline’

Construction starts have plummeted across the board as the sector battles a sluggish economy, with the only cheer coming from a modest rise in planning approvals.

The November issue of Glenigan’s quarterly construction review shows that project starts fell 27 per cent in the three months to October, to stand 59 per cent down on last year.

Main contract awards also declined by 27 per cent on the preceding quarter, down 51 per cent on the same time a year ago, the construction data company said.

There is a glimmer of hope as detailed planning approvals registered a modest 1 per cent rise, representing a 17 per cent increase compared with the year before.

But the sector-specific and regional index – measuring underlying project performance – paints a picture of “general decline”, Glenigan said, with project starts plummeting across every vertical.

Residential starts-on-site fell significantly during the three months, dropping 23 per cent during the index period to stand 30 per cent lower than a year ago.

Private housing was down a quarter on the previous year, declining 22 per cent against the preceding three months, while social housing also performed poorly, with work commencing on site falling 30 per cent during the three months to October and crashing by 46 per cent against the previous year’s figures.

The value of starts fell across all non-residential sectors during the quarter, with the biggest declines seen in the hotel and leisure, health, and industrial sectors.

Regional performance was poor across the board, with all parts of the UK seeing weak project-start performance.

Faring worst was the West Midlands, which had a particularly disappointing period with project starts decreasing 27 per cent in the three months to October and falling 43 per cent against the year before.

The North East and East of England also stumbled, with starts decreasing by 31 per cent and 34 per cent respectively, remaining 21 per cent and 31 per cent down on last year.

Glenigan economic director Allan Wilen said the underwhelming performance is symptomatic of several external constraints on the UK construction industry.

“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,” he said.

“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.”

However, he said the analyst’s recent construction forecast had anticipated industry recovery in 2024, with starts expected to grow 8 per cent next year.

“Furthermore, 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,” he said.

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