Industrial and housing performance particularly dismal, according to analyst

New construction work fell across the board in the first quarter of the year, according to Glenigan, with the industrial sector leading the decline. 

The analyst鈥檚 latest Construction Review, which focused on the three months to the end of March, showed project starts were down by nearly a half (-46%) on the previous year. 

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Source: HM Treasury

Glenigan economics director Allan Wilen said public spending announced in chancellor Jeremy Hunt鈥檚 recent budget would cheer contractors

Industrial sector performance was particularly poor, weakening 50% during the quarter and 64% down on a year ago. 

The residential market also experienced a precipitous decline 鈥� private housing was down 39% on the preceding quarter and halved over the year, while social housing starts dropped 41% and 52% respectively. 

All non-residential sectors experienced a decline on the previous three months, with offices down 32%, health dropping 36% and civils 28%. 

Education was the most promising sector, increasing a modest 4% on 2022 levels but still 5% lower than in the prior quarter. 

Glenigan鈥檚 economic director, Allan Wilen, attributed the bad performance to 鈥減ersistent, external economic pressures鈥� such as soaring energy costs and materials inflation, as well as a wider global shortage of key components.  

鈥淎n overall softening in activity across most of the UK construction sector aligns with the general, downward pattern of wider UK economic activity,鈥� he said.   

鈥淗igh-interest rates, declining business investment, and the resulting squeeze on household incomes are curbing activity in consumer-related verticals, including retail, hotel and leisure and private housebuilding.鈥�  

He added that it was 鈥渘ot all doom and gloom鈥�, pointing to capital investment in public sector work promised in the recent spring budget. 

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

Regionally, performance was also dismal, with Yorkshire & the Humber suffering the heaviest fall 鈥� 57% in Q1 and 65% down on the year. Recent strong output in the North-east also stalled, with a sharp 46% fall on preceding months. 

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