Construction sector recovery may be on the horizon, finds industry monitor

A modest rise in pipeline activity could be sign of recovery for the construction sector, finds industry moitor, Glenigan.

In the October 2022 edition of their Construction Review, Glenigan blamed a range of factors, including high materials and energy costs, economic and political chaos and ratcheting building regulations, for keeping the industry depressed in the near future.

However, the organisation’s review of major (>£100m) and underlying (<£100m) projects in the three months to the end of September 2022 found a modest rise in both main contract awards (+3%) and detailed planning approvals (+3%) which suggest the first signs of recovery.

The slight growth in the project pipeline can largely be attributed to a jump in major project contract awards, which were up 27% against the preceding three months, 59% higher than a year ago. Equally, major project planning approvals were up an impressive 58% by the end of Q3, to stand a staggering 158% up on 2021 figures.

However, underlying performance on smaller builds was comparatively week, tempering results, dipping 8% compared the previous three months in contract award terms, 6% down on last year. Despite planning approvals increasing 8% over the past quarter, they remained 10% lower than a year ago.

Commenting on the results, Glenigan Economics Director, Allan Wilen, said,

“The sector has faced considerable amounts of turbulence over the past twelve months. A new Prime Minister, changing of the ministerial guard and wildly fluctuating markets have done nothing to inspire consumer and investor confidence.

“At the time of this Review’s release, we find ourselves in a state of flux, with yet another new premier, however, the pound rallying once again and the promise of economic stability from the autumn financial statement should go some way to calming the choppy waters. With activity trickling back into the pipeline, everyone in the sector hopes the flow of awards and approvals picks up once again, even if project starts currently remain stagnant.”