Construction starts have plummeted as the sector battles a sluggish economy, with the only encouragement coming from a modest increase in planning approvals.
The November issue of Glenigan’s quarterly construction review shows project starts fell 27% in the three months to October, to be 59% less than last year.
Major contract awards also fell 27% from the previous quarter, down 51% from the same period a year ago, the construction data company said.
There is some hope as detailed planning approvals recorded a modest increase of 1%, representing a 17% increase compared to the previous year.
But the sector and regional index, which measures the performance of the underlying project, paints a picture of “general decline”, Glenigan said, with the project starting to plummet across all verticals.
On-site housing starts declined significantly over the three months, falling 23% over the index period and down 30% from a year ago.
Private housing was down a quarter on a year earlier, down 22% compared to the previous three months, while social housing also underperformed, falling 30% over the three months until October and 46% against. figures from the previous year.
The value of starts fell across all non-residential sectors during the quarter, with the largest declines seen in the hotel and leisure, healthcare and industrial sectors.
Regional performance was poor across the board, with poor performance at the start of the project in all parts of the UK.
Worst hit was the West Midlands, which had a particularly disappointing period, with project starts down 27% in the three months to October and down 43% on the previous year.
The North East and East of England also stumbled, with starts down 31% and 34% respectively, remaining 21% and 31% down on last year.
Glenigan chief economic officer Allan Wilen said the underwhelming performance was symptomatic of a number of external constraints in the UK construction industry.
“High interest rates and a persistently sluggish economy continue to depress consumer and investor confidence, leading to lower levels of activity in most of the private sector,” he said.
“The onset of the slowdown in public sector projects is particularly worrying as it points to the ongoing challenges for government departments in prioritizing capital projects, despite a significant renewal of capital expenditure from the previous financial year.”
However, he said recent analyst construction forecasts predicted an industry recovery in 2024, with starts expected to grow 8% next year.
“Furthermore, the recent increase in planning approvals offers a small glimmer of hope, with the potential to provide many opportunities for agile contractors over the coming years,” he said.
