In a noteworthy development, construction starts in 2024 have risen significantly compared to last year.
- The August 2024 edition of Glenigan’s Construction Review reveals an 8% increase in project commencements over 2023.
- This boost is predominantly driven by a remarkable 42% rise in major project initiations.
- Despite the overall positive trend, underlying projects saw an 11% decline from the previous year.
- Planning approvals have generally decreased, impacting future project foundations.
According to the August 2024 edition of Glenigan’s Construction Review, construction starts in the current year have experienced a notable increase of 8% compared to the same period in 2023. This uptick is primarily attributed to a substantial surge in major project initiations, which have soared by an impressive 42%. Economist Allan Wilén refers to this shift as “encouraging signs” that the industry is on a path of gradual recovery.
The review meticulously covers the three months leading to the end of July 2024, encompassing all significant undertakings valued over £100m and smaller projects under £100m. Each figure is seasonally adjusted to provide an accurate representation. While major projects have witnessed substantial growth, it is crucial to note the 11% fall in underlying project starts compared to the previous year, although there was a slight increase of around 2% compared to the preceding three months.
However, despite these promising signs in major project commencements, work starting on site did not experience growth compared to the previous quarter, dropping by 10% in the three months up to July. This decline highlights the complex dynamics at play within the industry as it navigates recovery phases. Economist Allan Wilén expressed optimism, recognising the 3% year-on-year growth in main contract awards as a positive indicator amid modest results from the new government’s emerging planning reforms.
Main contract awards have indeed seen a decrease of 9% against the last three months; however, they have edged ahead of last year’s figures, showing a 3% rise. An in-depth analysis reveals that major contract awards drove this progress, advancing by a third over the year. Unfortunately, underlying contract awards have declined by 5% compared to the previous period and 11% year-on-year, suggesting challenges remain in the broader market.
Additionally, planning approvals, fundamental for laying the groundwork for upcoming projects, have contracted across the board. They have reduced by 6% compared to the preceding three months and are down 32% from a year ago. While major planning approvals fell by 12% quarter over quarter, experiencing a significant 54% decrease from the prior year, a glimmer of hope was seen as underlying planning approvals experienced a minor 6% uptick quarter on quarter, though closing 5% lower than the same time last year.
Residential construction has experienced a period of relative growth, contributing to a 2% increase in underlying starts, according to Glenigan. This sector-specific and regional index suggests a modest but positive trend in some residential areas, providing a nuanced view of the industry’s state.
The construction industry is witnessing a delicate recovery, with major projects leading the charge amidst planning approval challenges.
