Industry Insights – January

New Records in 2022

The construction industry has proved it’s resilience over the last 12 months. Although sector activity was mixed, the industry overcame challenges and saw a record amount of contract awards and planning approvals.


2022 saw record levels – Barbour ABI’s view

According to the Barbour ABI January Snap Analysis,  the high planning activity in 2022 shows the demand for construction with record levels of contract awards (£80bn). Planning approvals also achieved an all-time high of £105bn, beating the 2016 record. The residential and industrial sectors had a strong performance in 2022. Infrastructure was another area with record results, which was mainly down to renewable energy projects.

In contrast, commercially sensitive sectors (residential, commercial and hotel & leisure) are weaker, as well as the education sector. In fact, education was the only sector with below average levels of contract awards in 2022. Planning applications maintained at pre-pandemic levels after recovering well in 2021. Although, this is not inflation adjusted, so it’s lower really.


Project starts softening – Glenigan’s view

2023 begins on a somewhat gloomy note, with starts softening during the final quarter of 2022. Glenigan predict project starts to decline by 2% in 2023.
Despite the economic uncertainty, some verticals rallied last year, especially commercial starts. Office starts rose 17% in Q4, up by a third on 2021 figures.


Residential slipped back 5% according to Glenigan

Residential project starts slipped back 5% during Q4, and 15% compared with the same period of 2021. The current spike in inflation, higher taxes, and rising mortgage costs are expected to constrain activity in consumer related areas in 2023. This includes private housing, retail, and hotel & leisure.

Warehousing continues to provide bright spot

In 2022, warehousing performance reflected the changes initiated by coronavirus restrictions and supply chain adjustments made after leaving the EU. This contributed towards a 25% increase in the value of industrial starts last year, a new record for the sector. Glenigan’s Construction Industry Forecast 2023-2024 predicts that activity in the sector will remain well above pre-pandemic levels this year.


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