Glenigan, one of the construction industry’s leading insight and intelligence experts, releases the July 2023 edition of its Construction Review.
The Review focuses on the three months to the end of June 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 July Review makes for grim reading, with construction-start performance weakening during the three months to the end of June, plummeting 26% against the preceding three-month period to stand 42% down on last year.
Main contract awards also fell back on the preceding three months, dropping 32% to stand down 30% against 2022 figures. Despite an improvement in detailed planning approval performance at the start of Q2, figures fell back 29% on the preceding period, finishing 1% behind the year before.
Glenigan’s Economic Director, Allan Wilen, says “The construction industry continues to be buffeted by strong headwinds with little sign these are going to calm down in the near future. As our latest forecast shows, the next six months will likely be turbulent ones. Upcoming interest rate hikes will further hinder projects moving to site, and we’re already seeing work falling back in the civil engineering sector with marked declines in both infrastructure and utilities. Whilst there are small signs of recovery in the long term, with positive private housing starts an example of stabilising conditions in some verticals, consumer and investor confidence still remains low, generally stifling activity in the here and now.”
The sector-specific and regional Index, which specifically focuses on underlying project-starts, follows. Overall, the July Review paints a picture of general decline, with almost all sector verticals dropping against the preceding three-month period.
Sector Analysis – Residential
Residential construction experienced a slight upturn during the three months to June as starts increased 10% (seasonally adjusted) but, disappointed when compared to the previous year’s performance, tumbling 40%.
Drilling down, private housing starts increased 17% against the preceding three months but weakened 46% compared with the previous year. In comparison, social housing performance was weak, finishing 9% down on the preceding three months, and dropping back 3% on 2022 levels.
Sector Analysis – Non-Residential
Hotel & Leisure was the only sector to experience relative growth during the Review period, and even then, it was modest. Project-starts increased 2% during the three months to June to stand 1% up on the previous year.
Industrial project-start performance was mixed, with the value increasing only 1% during the three months to June, whilst remaining 33% lower than 2022 levels.
Health performance was also mixed. The value of underlying project-starts fell back 22% compared to the previous year, but, more positively, advanced 51% against the preceding three-month period.
Office starts were disappointing, with the value weakening against both the preceding three-month period and the previous year, declining 38% and 57%, respectively.
Retail project-starts also slipped back abruptly, declining 14% against the preceding three months to stand 44% down on the year before.
Education and Community & Amenity starts decreased 18% and 43% against the preceding three months, to stand 2% and 45% down on 2022 figures, respectively.
Once again, civils work starting on-site slipped back, dropping 40% lower than the preceding three months to stand 54% down on a year ago. This was due in part to a marked decline in infrastructure starts, which dropped 35% against the preceding three months to remain an astounding 59% down on the previous year. Utilities starts also declined by 44% against the three months to the end of June, finishing 45% down on a year ago.
Regional Analysis
Regional performance was poor, with project-starts weakening across most areas of the UK during the three months to June.
Project-start performance in the North East and Northern Ireland was mixed, increasing 18% and 15%, respectively, but slipping back 33% and 7% on 2022 levels.
The East of England also experienced a mixed period, increasing 31% against the preceding three months but remaining 36% behind last year’s figures.
Wales suffered the heaviest fall, declining 46% against the preceding three months to stand 52% down on a year ago.
It was a similar story in Yorkshire & the Humber, with the value of project-starts decreasing 17% against the preceding three months and remaining significantly down (-41%) on the previous year.
Project-starts in the East Midlands also experienced falls against both the preceding three months (-1%) and previous year (-40%).
London and the South West weakened against the preceding three months, falling back 18% and 11%, respectively. Both regions were down on the previous year, remaining 36% and 46% lower than a year ago.
Scotland was down against both the preceding three months (-9%) and the previous year (-27%). This was also the case in the West Midlands, the South East, and the North West, which all crashed compared to both the preceding three months and previous year.
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