In the June to August summer months this year project starts plummeted as soaring material, energy and fuel costs hampered industry activity.
The September 2022 edition of Glenigan’s Construction Review reports that there was also a 12% fall in main contract awards compared to the preceding three months.
On the plus side, there was a 5% increase in detailed planning approvals compared to the previous three months, but they were still down on the same period a year before.
The September review indicates a shrinking pipeline and marked decline in project starts. Work starting on site fell 41% against the preceding three months and was 48% down on the year before.
The main contributor to this was a decline in major projects (£100m+) starting. The value of these fell 54% against the preceding three-month period and 74% year-on-year.
Start of work on projects valued at less than £100m was down 35% against the preceding three months and 30% lower than 2021 levels.
The house-building sector had a particularly bad summer, with project-starts falling 38% against the preceding three months and 28% year-on-year.
As well as ongoing materials inflation and high energy tariffs, house-builders also faced the impact of the Building Regulations’ Part L introduction. In Glenigan’s assessment, lack of clarity on the new standard inevitably led to a softening of activity as developers rush to remain compliant, stalling activity until regulatory requirements can be met.
Office building also plummeted, with starts falling 51% in the June-August period compared to March-May – and by 48% against on 2021.
Civil engineering starts fell 27% against the preceding three months and 25% compared to a year ago. Utilities work starting on site fell by a third while infrastructure-starts fell by a quarter during the three months to August. Both sectors experienced a value decline of a quarter against the year before.
Northern Ireland was the only region of the UK to see any year-on-year growth, with an 87% rise in starts.
By contrast, London experienced the weakest period for project-starts, with the value declining 55% compared with the preceding three months to stand 62% down on the previous year.
The East Midlands also experienced a steep fall during the three months to August to stand 46% lower than the preceding three months and 37% down on the year. Scotland fell 39% against the previous three months and 35% compared with the year before.
Glenigan economics director Allan Wilen said: “Unfortunately, this Review highlights that the construction industry is still struggling under the burden of supply chain issues and materials inflation caused by the war in the Ukraine. This has only been worsened by a generally weak economic outlook, the cost of living crisis, and high energy costs. We can expect slow progress going forward as the UK heads towards all-time low levels of consumer confidence and a looming recession, but luckily we’re confident in our prediction in the spring/summer forecast of industry recovery by 2023.”