Industry Insights December

Every Region in England is suffering with declines in project-starts

A deepening recession, continued construction materials inflation, and flat lining growth continue to hinder the industry, according to Glenigan.

Unfortunately, with the Russia-Ukraine war and resulting materials, energy, and fuel price inflation, a return to pre-COVID activity levels will be delayed for some time.

Every region is suffering with declines in project-starts – Glenigan’s view

According to the Glenigan index, November figures dropped, wrapping up a disappointing autumn and promising a particularly bleak winter sector-wide.

Underlying work commencing on-site fell 11% against the preceding three months to November. That’s also 7% lower than the same period a year ago.


Upturn in major construction project starts


Defying the economic gloom, the level of major construction projects (worth over £100 million) remains healthy. Several large industrial and commercial developments are underway. This led to an increase in major project starts – 28% up on the previous three months and 19% up on the same period a year ago.


Most non-residential sectors experienced declines in project starts

Most non-residential sectors experienced declines in project-starts against the preceding three-month period. Amidst the cost of living crisis and weakened consumer spending, hotel & leisure work starting on-site suffered during the three months to November, falling 30% to stand 40% down on 2021 levels.

Industry spotlight: Focusing on healthcare construction

Health project-starts also experienced a weak period, tumbling 37% against both the preceding three months and the previous year.

In more positive news, there is a confirmed funding boost for hospital construction for the building or renovating 40 hospitals. In the Autumn Statement the government allocated £12 billion to the Department of Health and Social Care capital budget for 2022-23.

Glenigan’s construction market research can reveal that many of these proposed hospital projects already have planning permission.


A return to more expected award levels

December’s Barbour ABI Snap Analysis showed that contract awards have returned back down to a more expected level.

November was the 4th month of above average levels for planning approvals but planning applications continued to fall. However, despite the 14% fall in planning applications, there was very high commercial activity in November.

Planning approval activity in the industrial sector remains the highest thanks to warehousing.

The healthcare sector increased by 63% back to strong levels seen over 2021 and 2022, and the commercial sector rose by 100% to £1.3bn, the highest value since November 2021.


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