20th April 2023

Glenigan, one of the construction industry’s leading insight and intelligence experts, has released the April 2023 edition of its Construction Review.

The Review focuses on the three months to the end of March 2023, covering all major (>£100m) and underlying (<£100m) projects, with all underlying figures seasonally adjusted.

It’s a report which provides a detailed and comprehensive analysis of year-on-year construction data, giving built environment professionals a unique insight into sector performance over the last 12 months.

The April Review highlights the consistently weak construction-start performance over Q.1 2023, as the industry navigates a depressed economic landscape.

Averaging £5,067 million per month, work commencing on-site fell 22% against the preceding three months’ performance, to stand 46% lower than the same time last year.

Main contract awards also stalled, falling back 4% during the three months to March to stand 15% down on 2022 figures.

Striking a more positive note, detailed planning approvals increased on both the preceding quarter and the previous year, advancing 41% and 29%, respectively.

Commenting on the figures, Glenigan’s Economic Director, Allan Wilen says, “Poor construction performance in Q.1 can be attributed to persistent, external economic pressures. Soaring energy costs and materials price inflation is driven in part by the Russia-Ukraine conflict but also a wider, global shortage of key components, which are weighing the industry down, leading to pauses and delays in project starts.

“An overall softening in activity across most of the UK construction sector aligns with the general, downward pattern of wider UK economic activity. High-interest rates, declining business investment, and the resulting squeeze on household incomes are curbing activity in consumer-related verticals, including retail, hotel & leisure, and private housebuilding.

“However, it’s not all doom and gloom. The Chancellor’s recent Spring Budget offers some positive news for UK contractors, with promised capital investment in publicly-funded sectors. Particularly education, health and transport infrastructure, indicating a boost to the construction pipeline.”

The sector-specific and regional index follows. Measuring underlying project performance, the April Review paints a picture of general decline across almost every sector vertical.

Sector Analysis – Residential

Residential starts-on-site fell dramatically during Q.1, dropping 39% in the three months to the end of March, standing 51% lower than a year ago.

Private housing was also down 39% on the preceding three months, with performance slashed in half compared with the previous year.

Social housing also posted poor results, with work commencing on-site falling 41% against the preceding three months and plummeting by 52% against last year’s figures.

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Sector Analysis – Non-Residential

Overall performance was weak, with all verticals experiencing a decline against the preceding three-month period.

Industrial project-start performance was especially poor, with project-starts weakening 50% during Q.1 to stand 64% lower than a year ago. Retail also fared poorly, with the value of project-starts falling back 32% against the preceding three months and 48% against the previous year.

It was a similar story for offices starts, which faltered on a previous flurry of activity in Q.4 2022. The value of underlying project-starts fell back 32% during Q.1 to stand 40% down on a year ago.

Health project-starts also slipped back, dropping 36% against the preceding three months to stand 42% down on the year before.

Hotel & leisure (-44%) and community & amenity (-5%) starts decreased against the preceding three months, to respectively stand 40% and 19% down on the previous year.

Education starts were more promising, despite falling 5% against the preceding three months, they increased a modest 4% on 2022 levels.

Civils work starting on-site dropped 28% against the preceding three months to stand 29% down on a year ago. Infrastructure starts dropped 43% against the preceding three-month period, down 49% on the previous year’s figures.

However, civils general decline was partly offset by utilities activity, which only dipped 3% in Q.1 2023, to finish an impressive 23% up on a year ago.

Regional Performance

Regional performance was poor, with all areas of the UK experiencing weak project-start performance during the three months to the end of March.

Yorkshire & the Humber suffered the heaviest decreasing, falling 57% during Q.1 to stand 65% down on a year ago.

Similarly, the South East, saw the value of project-starts tumble 48% against the preceding three months, remaining significantly lower (-52%) than 2022 levels.

Stalling on its recent strong performance, project-starts in the North East experienced a sharp fall against both the preceding three months (-46%) and previous year (-41%).

London and the South West weakened against the preceding three months, falling back 28% and 24%, respectively. Both regions were down on the previous year, remaining 42% and 31% lower than a year ago.

Some areas of the UK fared even worse, including Scotland where the value of project-starts fell 48% against the preceding three months to stand 56% down on a year ago. This was also the case in the East Midlands, West Midlands, Wales, Northern Ireland, and the North West which all crashed compared to both the preceding three months and previous year.

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