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UK Construction Sector Witnesses Modest Recovery in September

The UK construction industry has shown signs of resilience with a modest recovery in September, ending a two-month streak of declining output.
According to Construction Enquirer this return to slow growth, marked by a 0.4% increase, has been largely attributed to a 2% rise in repair and maintenance activities. However, this positive development was tempered by a continued decline in new work, which fell by 0.8% during the month.
In the realm of new construction work, the commercial sector stood out as the only area to register growth. It witnessed a 3% monthly increase and is now 5% higher compared to the same period last year. This growth in the commercial sector, albeit isolated, signals a cautious optimism in a segment of the market that has been under considerable pressure in recent times.
Adding to this glimmer of hope are the latest figures on new construction orders, which saw a 3.9% increase in the third quarter of 2023. This uplift is primarily driven by public sector orders and infrastructure projects, which surged by 24% and 14% respectively. These sectors’ robust performance underscores the critical role of public investment and large-scale infrastructure projects in sustaining the construction industry during periods of market volatility.
On a related note, the annual rate of construction price inflation has shown signs of easing, slowing to 3.9% in the 12 months leading up to September. This is a significant decrease from the record annual price growth of 10.4% observed in May 2022. The reduction in price inflation is a welcome respite for the industry, potentially easing cost pressures that have been a significant concern for builders and developers alike.
Clive Docwra, Managing Director of property and construction consultancy McBains, told Construction Enquirer: “Today’s figures will provide a measure of relief for the construction industry, coming off the back of two successive months of falling output.”
He also noted a slight uptick in development lending, with schemes being re-purposed to align with current market conditions. However, he cautioned that this does not fully reflect the broader market sentiment, as evidenced by the decrease in new work.
Docwra also highlighted the challenges still faced by the industry, including borrowing costs that continue to deter some investments. While interest rates may have peaked, the longer-term outlook remains uncertain. He concluded on a positive note, welcoming the increase in total construction orders in the third quarter, particularly in the public and infrastructure sectors.
However, he indicated that volume housebuilding might take longer to rebound while interest rates remain high, suggesting a mixed picture for the industry’s immediate future.

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