Glenigan has released the May 2023 edition of its Construction Index. The Index focuses on the three months to the end of April 2023, covering all underlying projects, with a total value of £100m or less (unless otherwise indicated), with all figures seasonally adjusted.

The report provides detailed analysis of year-on-year UK construction data over the last 12 months. Unfortunately, the overall downward trend continued into the May Index, with project starts sliding 23% against the preceding three months, to finish 41% lower than a year ago.

Crippling inflation, soaring material and energy costs and confusion around new regulatory frameworks are all affecting activity, the firm said. The persistence of these factors has inevitably led to an (almost) unprecedented run of decline and delay, as contractors and developers pause starts and investors hold-back until markets stabilise and prices come down.

According to Glenigan’s economics director, Allan Wilen: “There’s little doubt starts on-site have crashed and it looks as if this protracted period of depressed activity across the entire sector will continue well into the year. A weak economic outlook and myriad external events are to blame for the current situation and it will likely be Q4 2023, or even Q1 2024, before we see a significant softening in interest rates. This will, it’s hoped, inspire the confidence needed to commit the collective shovel firmly into the ground on a nationwide scale.”

Residential
Overall, residential construction performed poorly, with project-starts falling 18% in the three months to April, to stand 44% lower than a year ago. Particularly, private housing fell back sharply, down 51% compared to 2022 levels and 23% on the preceding three months.