Starts, awards and planning approvals all pointing downwards

Construction starts remained weak throughout the three months to January, with main contract awards and detailed planning approvals also slumping, says the February 2023 edition of Glenigan’s Construction Review.

Project starts are down by 47% in the three months to January 2023, compared to the preceding three months’ performance, and down a third year-on-year.

Main contract awards dropped 21% against the preceding period, to stand 16% lower than the same time a year ago.

Detailed planning approvals were 17% down on the preceding three months although flat against the year before.

On the plus side, while the value of major (£100m+) project contract awards fell by 31% against the preceding three months, it was 17% higher than the same period a year before. Similarly, major planning approvals were up 34% on 2022 levels.

Glenigan economic director Allan Wilen said: “Starts on site are softening and, as global and national disruption continues, we’ll likely see contractors adopting a cautious and retrenched approach, pushing back start dates until the economic landscape looks less hostile. Rising mortgage rates, falling real wages and poor consumer confidence is likely to cause a further downturn in activity, but that’s not all. Many built environment professionals are still getting to grips with recently introduced regulations, particularly Part L of the Future Homes Standard, and the enforcement of the Fire Safety Act. No doubt this will also set back residential starts for the foreseeable future as developers seek to comply with tougher specification requirements.”

He added: “However, infrastructural investment does shine a light. It will help offset constrained activity with multi-billion pound projects including HS2, Hinkley Point C, as well as long-term frameworks activity in roads and energy. Hopefully, the chancellor’s spring budget announcement next month will lay out more concrete details of the Government’s spending in these verticals.”

Sector analysis

Residential starts were down 26% in the three months of November to January compared to the previous three months and 38% lower than a year before.

Industrial project-starts suffered a 34% fall during the three months to January, with levels down 45% compared to the year before.

In the retail sector, project starts fell 29% against the preceding three months and 33% on the year.

However, hotel & leisure starts on site increased by 16% against the preceding three months, as did starts in the healthcare market although both were flat year-on-year.

Education project starts declined 19% against the previous three months and 31% compared to the previous year.

Office starts were down 26% down during the three month period and 7% down on the year.

Civil engineering work starting on site was down 3% against the preceding three months but up 5% on the year. Although utilities dipped 8% against the three months to January, figures rose by 26% compared to 2022. Infrastructure performance stagnated, remaining flat against the previous three months, registering a modest decline of 4% on last year.

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