Glenigan, one of the construction industry’s leading insight and intelligence experts, releases the September 2023 edition of its Construction Review.
The Review focuses on the three months to the end of August 2023, covering all major (>£100m) and underlying (<£100m) projects, with all underlying figures seasonally adjusted.
It’s a report which provides a detailed and comprehensive analysis of year-on-year construction data, giving built environment professionals a unique insight into sector performance over the last 12 months.
Sector-wide, the September Review delivers disappointing results. Construction-start performance remained weak in the three months to August, as economic contraction continued to offset industry growth.
Work commencing on-site fell 14% against the preceding three months to stand 22% lower than a year ago. Main contract awards also faltered on the preceding three months’ performance, declining 37% in the three months to August to stand 27% lower than the same time last year.
On a more positive note, detailed planning approvals, shot up 27% against the previous year, despite falling back 10% against the preceding quarter.
Commenting on the Review, Glenigan’s Economic Director, Allan Willen says, “Whilst recent editions of the Review have made for sobering reading, an impressive uptick in detailed planning approvals on last year should be welcomed, driven by a rise in a major (£100m plus) projects in the development pipeline since the start of the year including phase 2a of HS2. This highlights the importance of the project to potential future industry workload. However, external market pressures continue to dampen overall project-start performance, suggesting it will be some time before a return to market stability and 2021 levels of construction activity.
“Nevertheless, it’s encouraging to see growth in individual sector verticals, with civils starts up 3% and a tentative recovery in residential starts. Furthermore, the industry will likely see an uptick in remedial work over the next few months, as national programmes are introduced to address the widespread RAAC risk across the public and private sector.”
The sector-specific and regional index follows. Despite the upbeat news around overall planning approvals, and bright spots in residential and civils performance, the rest of the September Review paints a depressing picture of persistent decline across almost every sector vertical.
Underlying Sector Analysis (projects under £100m) – Residential
Residential starts-on-site increased 6% during the three months to the end of August to stand 11% lower than a year ago.
Private housing was up 14% against the preceding three-month period, but weakened 9% compared to 2022.
Likewise, social housing project starts’ performance was weak, falling 19% against both the preceding three-month period and previous year.
Sector Analysis – Non-Residential
Non-residential project-starts declined across the board, with almost all sectors dropping against the preceding three-month period.
Retail was the only sector to experience significant growth during the Review period, bucking the downward trend with a 33% increase on the three months to August. However, starts remained 24% behind the previous year.
Civil engineering performance increased 3% against the preceding three months but once again slipped back against the year before, down 29%. Infrastructure starts drove modest growth against the preceding period, advancing 15%, but remained 33% down on the previous year. Utilities starts declined by 12% against the preceding three months to stand 21% down against the previous year.
Industrial project-starts performance was particularly disappointing, with project-starts suffering a 17% fall during the three months to August to stand 45% lower than a year ago. Offices were similarly affected, with the value of underlying project-starts falling back 25% against the preceding three months, finishing 44% down on last year.
Hotel & leisure also fared poorly, with the value of project-starts weakening 38% against both the preceding three-month period and the previous year.
Education (-37%) and community & amenity (-37%) starts decreased compared to the preceding three months, leaving them 10% and 51% down on the previous year, respectively.
Health starts experienced a mixed period, increasing 8% against the preceding three months but remaining 7% below 2022 levels.
Regional Performance
Regional performance was poor, with most areas of the UK experiencing a weakening in project-starts during the three months to the end of August.
Northern Ireland was the only region to experience growth against the previous year, increasing 80%, as well as 23% against the preceding three months.
Wales experienced the sharpest increase against the preceding three months, with starts rising 50% during the three months to August but remaining 19% down on the year before.
The West Midlands posted a mixed performance, with the value of starts increasing 8% against the preceding three months but declining 30% against the previous year.
Starts in the South East remained level with the preceding three months but were 24% down on the previous year. The East Midlands also performed poorly, with the value of project-starts declining by almost a quarter during the three months to August to finish 24% down against the preceding three-month period and 36% lower compared to 2022.
Project-starts in the North East and East of England weakened, slipping back 28% and 14% respectively, to stand 20% and 11% lower than a year ago.
London and the South West saw the value of project-starts tumble 10% and 15% against the preceding three months, remaining 12% and 42% behind 2022 levels, respectively.
Similarly, Scotland experienced a decrease against both the preceding three months and previous year, with the value of project-starts slipping back 20% and 24%.
Yorkshire & the Humber and the North West both suffered significant falls in project-starts compared to the preceding three months and previous year.
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