The latest figures present a mixed narrative for the construction industry.
- Despite an overall output growth of 0.8% in Q3, new construction orders have dropped by a significant 22%.
- September’s construction output saw a marginal 0.1% rise, driven mainly by repair and maintenance.
- Private new housing and commercial sectors faced the steepest declines in new orders, contributing to the overall downturn.
- Industry experts remain cautiously optimistic about the long-term outlook despite current challenges.
The construction industry in Great Britain has experienced a varied performance in the third quarter. While the sector saw an increase in output growth by 0.8%, there is a concerning decline in new orders by 22%. This downturn in new orders was primarily driven by a significant fall in private new housing and private commercial new work, which dropped by 31.3% and 20.8%, respectively.
In September 2024, the construction output exhibited a modest growth of 0.1%. This growth was largely due to repair and maintenance work, which increased by 0.4%, while new work saw a slight decrease of 0.2%. The monetary value of the output in September reached £17,654 million. Despite these incremental gains, the drop in new orders poses a challenge for the industry’s forward momentum.
Forward indicators for the construction industry suggest a challenging outlook, with new orders declining significantly by £2,722 million in the third quarter compared to the second. Public new orders also decreased notably by 28.0%, amounting to a £532 million drop. This decline in new orders follows a more positive performance in the previous quarter, where there was a 16% rise in orders.
Comments from industry leaders suggest a nuanced perspective on these developments. Clive Docwra from McBains highlighted the mixed results, noting the sector’s outperformance compared to other industries despite the downturn in new orders. He pointed out that uncertainty over impending budget decisions might be affecting investor confidence, with high interest rates likely to keep costs elevated.
Josh Ward-Jones of Bloom Building Consultancy remarked on the industry’s resilience, acknowledging that while there has been recovery from previous quarterly falls, total construction output remains below the levels seen in 2023. He expressed concerns over the slowing of private sector housebuilding due to persistent high interest rates affecting developers. The decline in new orders for private sector housebuilders, down by a third compared to the previous quarter, underscores the challenges ahead.
Despite current setbacks, the construction industry remains cautiously optimistic for future growth.
