Despite improving market conditions, Mace has maintained its tender price forecasts amid ongoing political uncertainty.
- Currently, the tender price forecasts for 2024 and beyond stand unchanged, as expectations hinge on the forthcoming government’s policies.
- Material costs have decreased annually, yet construction output remains challenging with a 0.9% industry contraction.
- Labour cost pressures are easing, despite a significant rise in vacancies compared to 2019.
- The industry faces mixed metrics, with long-term growth dependent on strategic governmental support and alignment within the sector.
In a climate of fluctuating economic variables, Mace has opted to keep their tender price forecasts unchanged despite slight improvements in market conditions. The decision mirrors the cautious sentiment prevailing within the construction industry, driven largely by the uncertainties surrounding impending government changes.
The forecast, as it stands, predicts a national tender price inflation of 2.5% for 2024, rising to 3% for the subsequent two years, while London anticipates a steadier increase from 2% to 3% over the same period. The static projections underscore Mace’s prudence amidst unpredictable economic developments.
Labour costs have shown signs of decreasing pressure, with insolvencies reaching their lowest since late 2021. However, the sector’s challenges persist, evidenced by a contraction of 0.9% in construction output in the last quarter. This suggests that while some aspects of the cost environment are improving, the industry as a whole faces considerable hurdles.
Material costs have recorded a 2.3% decrease annually, and new construction orders have witnessed an uptick since the year’s start. However, the robustness of these positive indicators is undermined by a significant rise in job vacancies—standing 40% higher than levels observed in 2019. This stark contrast highlights the ongoing demand for skilled labour, a factor crucial to advancing industry productivity and efficiency.
Adding to the complexity, the Construction Industry Training Board forecasts a requirement for an additional 251,500 workers entering the industry over the next five years to meet demand. This underlines the necessity for strategic development and training initiatives, alongside collaborative practices among stakeholders to foster a conducive working environment.
Oliver North, a director at Mace, articulates the need for political stability and policy support to unlock growth potential. He emphasises that collaboration across the supply chain, with proactive client and contractor engagement, remains essential to optimise project outcomes amidst these turbulent times.
Ultimately, the outlook for the construction sector is cautiously optimistic, hinged on strategic governmental interventions and collaborative industry practices.
