Glenigan, one of the construction industry’s leading insight and intelligence experts, recently released the March 2023 edition of its Construction Review.
The Review focuses on the three months to the end of February 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.
The March Review highlights the consistently weak construction-start performance over the first two months of 2023, as the industry navigates a tough economic landscape.
Averaging £4,173 million per month, project-starts plummeted 55% against the preceding three months’ performance, to stand 46% lower than a year ago.
Main contract awards were also sluggish, dipping 16% in the run-up to March and down 15% on 2022 figures. However, detailed planning approvals registered a 19% increase in the three months to the end of February, growing 21% against the previous year.
Commenting on the topline figures, Glenigan’s Economic Director, Allan Wilen says, “This underwhelming performance can be largely attributed to ongoing external constraints on the UK construction industry, including soaring energy and materials price inflation, driven by international conflict and demand-led shortages. Coupled with high-interest rates and a raft of incoming business-led taxes and you have a perfect set of conditions to dent consumer and investor confidence, resulting in depressed activity across most of the UK Construction sector.
“However, the current situation may ease in the coming months, political stability has improved over the last few weeks and the expectation that interest rates will not increase as much as initially feared will hopefully provide a degree of certainty.
“The Chancellor’s Spring Budget announcement has offered a future glimmer of hope, particularly a significant pipeline of upcoming work through an ambitious, nationwide programme of Investment Zones and urban regeneration projects coupled with a promised upgrade of transport infrastructure. This will no doubt provide plenty of opportunities for hungry and agile contractors over the coming years.
“Also welcome is confirmation in the Spring Statement that the Government intends to ease the restrictions on the recruitment of overseas labour for five construction trades. This should help ease the staff recruitment and retention problems experienced by many firms in the industry.”
The sector-specific and regional index follows. Measuring underlying project performance, the March edition painted a picture of general decline. Project-starts across almost every vertical falling in the three months to February plummeted.
Sector Analysis – Residential
Overall residential starts-on-site fell during the three months to February, dropping 27% during the index period to stand 43% lower than a year ago.
Drilling into the verticals, private housing was down 39% on the previous year, declining 29% against the preceding three months. Social housing also performed poorly, with work commencing on-site slipping back 22% during the three months to February and plummeting by 57% against the previous year’s figures.
Sector Analysis – Non-Residential
The value of starts fell across almost all non-residential sectors during the three months to February.
Industrial performance was disappointing, sinking 41% during the three months to February to stand 57% lower than a year ago. Retail lost ground as well, with the value of project-starts declining 24% against the preceding three months and 39% against the previous year.
Offices were also on the decline, having lost momentum on their earlier burst of activity in Q.4 2022. The value of underlying project-starts slipped back 23% against the preceding three months to stand 28% down on 2022 levels.
Health starts crashed, falling 34% against the preceding three months and declining 50% on the year before. Despite a modest 1% hiccup against the previous three-month period, education project-starts were also 24% lower than last year.
Hotel & Leisure and Community & Amenity were two of only three verticals to experience growth against the preceding three months, rising 35% and 5%, respectively. However, both failed to increase on the previous year.
Civils performance slipped back 8% against the preceding three months to stand 17% down on a year ago. Infrastructure starts dropped 18% against the preceding three-month period, remaining down 43% on the previous year’s figures.
However, the decline in civils was partly offset by utilities activity, with starts increasing 6% against the preceding three months to stand an impressive 76% up on a year ago.
Regional Performance
Most parts of the UK experienced weak project-start performance during the three months to February. The North East was a rare bright spot, with project-starts advancing 19% during the three months to January but remaining 20% down on a year ago.
It was a similar story in the South East, with the value of project-starts increasing 5% against the preceding three months but remaining 27% behind the previous year.
Performance in London (-18%) and the South West (-15%) was particularly lacklustre against the preceding three months, also slipping back 46% and 34% against the year before.
Some regions fared worse still, including Scotland, where the value of project-starts fell 31% against the preceding three months to stand 35% down on a year ago.
Yorkshire & the Humber experienced the sharpest decrease against both the preceding three months (-53%) and the previous year (-61%).
Wales, Northern Ireland, the East Midlands, West Midlands, and the North West all suffered falls in project-starts against both the preceding three months and previous year.
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