Construction monitor reveals continued decline in project starts

Construction sector monitor, Glenigan, has revealed a significant decline in construction starts in the three months to the end of July 2023 compared to the same quarter last year.

Glenigan’s quarterly index of construction starts saw only private housebuilding up on the previous quarter’s performance; however, residential starts were more than an a quarter behind on 2022 figures. Non-residential starts fell 23% on the previous quarter, and were 38% down on the same period last year, while civil engineering projects starting on site declined 25% on the preceding quarter, and were 46% down on 2022. The overall value of work was also down 33% on the same period last year.

The figures continue a overall downward trend in construction sector output over the past 12 months, with Glenigan citing the combined challenges of inflation, higher interest rates and labour shortages in the sector for hindering project starts. Analysis also warned of the impacts of stricter building regulations surrounding fire safety and ventilation on the performance of the sector in the remainder of 2023.

Commenting on the findings, Glenigan’s Economic Director, Allan Wilen, says,

“The disappointment continues as the market remains depressed, and given the unusual economic circumstances, this is hardly surprising. Uncertainty has stalled activity and many investors, public and private, are reluctant to commit to new projects. Furthermore, 12 to 18 months out from a General Election, it’s likely the incumbent Government will adopt a more cautious approach, particularly to big infrastructure, in the lead-up. This will further slow activity in the short term.

“On the other hand, it was encouraging to see that private residential construction continues to rally, suggesting developers are altering their plans after a drop in starts during H.1 2023. The Home Office’s easing of visa restrictions for construction trades may also improve staff recruitment and help lift activity further in the second half of the year.”