NEW research has found the UK construction industry continued to struggle in September, with spending down 23% and planning approvals dipping by 13%.
The figures were revealed in the latest analysis by Barbour ABI.
Infrastructure was described as the ‘star performer’ in planning approvals, rising 16% in September and nearly 80% year on year to 3.3 billion in Q3. However, infrastructure spending fell 28% to less than £900 million from August to September and remains down 41% year-on-year. Barbour ABI said energy remains a bright spot, but activity across other sub-sectors was ‘subdued’.
Kelly Forest, Barbour ABI consultant economist, said, “Infrastructure is currently painting an uncertain picture with policy changes around HS2 weighing heavily on the sector’s future. How fast funds are reallocated from HS2 phase 2 and to where will have a huge impact on construction businesses operating in the transport space.
“Meanwhile, investment in green energy projects remains an important crutch for the industry and a key driver for infrastructure activity. We will have to hope that continues despite Rishi Sunak’s recent vacillating on green policy.”
The latest analysis found some positive indicators for residential construction. While awards were still down from this time last year, they jumped 11% from August due to a ‘revival’ in activity by local authorities. There was also a ‘mini-resurgence’ in the latest planning application figures, with a 20% climb in August to £4 billion.
“Any good news for beleaguered housebuilders is welcome as the sector continues to struggle, and September revealed some interesting trends,” Kelly Forrest added. “Local authorities may provide an unexpected lifeline as they seek public-private partnerships to fulfil ever-urgent social housing needs. We have already seen housebuilders such as Vistry switching focus to social housing, and the latest figures show that activity is increasing in this area.
“That said, approvals remain low, so it will be interesting to see how this pans out over the as we head into 2024.”
As Q3 came to a close, Barbour ABI explained that patterns also emerged in longer-term trends. Q3 awards were 11% higher than a year ago in all sectors and 20% higher than Q2. Approvals tailed off in September, but Q3 was up by nearly 50% against Q2 and nearly 30% higher than Q3 2022.
In terms of planning applications, there have been ‘relatively consistent’ levels in recent months.
