The UK
construction industry continued to struggle with spending down 23% in September
and planning approvals also down 13% according to the latest analysis by
construction analysts Barbour ABI.
Meanwhile,
planning applications failed to break out of their recent holding pattern.
Infrastructure was a star performer in planning approvals, raising
16% in September and nearly 80% year on year to 3.3bn in Q3. However, it wasn't
all good news, with infrastructure spending falling 28% to less than £900m from
August to September and remaining down 41% year-on-year. Energy remains a
bright spot, but activity across other sub-sectors was subdued.
Barbour ABI Consultant Economist Kelly Forest commented: “Infrastructure is currently painting an
uncertain picture with policy changes around HS2 weighing heavily on the
sector’s future. How fast funds are reallocated from HS2 phase 2 and to where
will have a huge impact on construction businesses operating in the transport
space.
Meanwhile, investment in green energy projects remains an
important crutch for the industry and a key driver for infrastructure activity.
We will have to hope that continues despite Rishi Sunak’s recent vacillating on
green policy.”
There were some rare positive indicators for residential construction
in the latest analysis. While awards were still down from this time last year,
they jumped 11% from August due to a revival in activity by local authorities.
There was also a mini-resurgence in the latest planning application figures,
with a 20% climb in August to £4bn worth of applications.
“Any good news for beleaguered housebuilders is welcome as the
sector continues to struggle, and September revealed some interesting trends,” said Forrest. “Local Authorities may provide an unexpected lifeline as they seek
public-private partnerships to fulfil ever-urgent social housing needs. We have
already seen housebuilders such as Vistry switching focus to social housing,
and the latest figures show that activity is increasing in this area.
“That said, Approvals remain low, so it will be interesting to see
how this pans out over the as we head into 2024.”
As Q3 came to a close, patterns also emerged in longer-term
trends. Q3 awards were 11% higher than a year ago in all sectors and 20%
higher than Q2. Approvals tailed off in September, but Q3 was strong overall,
up by nearly 50% against Q2 and nearly 30% higher than Q3 2022.
In terms of planning applications, there have been relatively
consistent levels in recent months, painting an overall picture of
stabilisation - if at a slightly lower level than in 2022.
