May 2024 saw fluctuations in the North East’s construction sector.
- Project starts and main contract awards significantly underperformed compared to the previous year.
- Detailed planning approvals showed improvement over the previous three months and the past year.
- Social housing emerged as a dominant sector, with a remarkable increase in project starts.
- Private housing and retail sectors faced challenges, witnessing declines in project activity.
In May 2024, the construction sector in the North East experienced notable fluctuations, impacting project starts and main contract awards negatively. The total value of work commencing on-site in the three months leading up to May, amounting to £809 million, remained flat compared to the preceding quarter. This figure reflects a substantial 34 per cent decline from a year prior. Major projects exceeding £100 million were hit hardest, showing a year-on-year decrease of 76 per cent, despite a 14 per cent reduction from the previous quarter. Underlying project-starts, valued below £100 million, showed a marginal 3 per cent decline from the previous quarter, standing 6 per cent lower year-on-year.
Main contract awards in the North East recorded a steep decline of 56 per cent over the three months, compared to the previous year, totalling £442 million. There were no major projects initiated during this period, and underlying contract awards fell sharply by 57 per cent from the previous quarter and 56 per cent year-on-year. This decline indicates a challenging environment for construction contracts in the region.
In contrast, the total value of detailed planning approvals reached £1.32 billion, marking a 47 per cent increase over the previous three months, and a 12 per cent rise from last year. However, underlying detailed planning approvals fell by 30 per cent, on a seasonally adjusted basis, compared to the last quarter, with a notable 39 per cent drop year-on-year. Major projects within planning approvals totalled £695 million, reflecting substantial growth compared to the absence of major projects in the previous quarter, and a striking 363 per cent increase from the previous year.
Social housing emerged as a significant contributor to project starts in the North East, accounting for 35 per cent of the total with an impressive value of £286 million. This sector witnessed an unprecedented 514 per cent increase, contrasting starkly with private housing, which, despite being the second largest sector in terms of share, saw a 42 per cent decline from 2023. The retail sector, while contributing 14 per cent to project starts, experienced an extraordinary 807 per cent increase in value, totalling £114 million, reflecting a robust resurgence from the previous year’s figures.
The detailed planning approvals observed offices dominating with a 38 per cent share, experiencing phenomenal growth exceeding four digits compared to the previous year, totalling £504 million. Infrastructure approvals, valued at £229 million, also displayed substantial four-digit growth, representing 19 per cent of overall approvals. Meanwhile, private housing approvals suffered a 53 per cent decline from the previous year, amounting to £265 million. Utilities approvals rose significantly, multiplying eightfold from the previous year, forming 9 per cent of the total value.
The construction sector in the North East faces a mixed outlook with challenges in project starts but promising trends in planning approvals.
