Construction Industry Update – July 2024

Labour plans to target action on housebuilding from ‘day one’

The Labour Party wants to implement planning reforms in an effort to supercharge housebuilding.

In an interview with The Times, party leader Kier Starmer and shadow chancellor Rachel Reeves said they would “hit the ground running” and initiate a flurry of housebuilding initiatives from “day one”.

Starmer told the newspaper: “I want to make sure we can start on this from day one,” while Reeves said there was an “urgency” for Labour to become the party of housebuilders.

UK Construction grows despite fall in housing

The UK’s construction sector continued to expand in June, although it lost some momentum amid fresh fall in housebuilding, according to a survey.

A slower rise in new orders was also recorded, in some cases linked to election uncertainty, but the pace of job creation picked up. Meanwhile, the rate of firms’ input cost inflation accelerated from May, but remained muted.

The headline S&P Global UK construction purchasing managers index (PMI) feel to 52.2 from 54.7, but remained about the 50 no-change mark that separates expansion from contraction for the fourth month running.

‘Marketing rallying’ government set to drive construction growth

The latest UK Construction Industry Forecast from Glenigan has been released and shows a brighter outlook for the industry in the latter part of 2024 following a period of short-term challenges.

The forecast for 2024-2026 shows that the construction will face near-term challenges including weak economic growth, high interest rates and disruptions caused by the general election. These factors are expected to further constrain private sector investments and delay public sector projects.

However, the outlook brightens over the forecast period. The early election will reduce political uncertainty. While a strengthening economy is expected to boost consumer and business confidence from H2 2024.

Civils costs forecast to rise 14% in five years

The BCIS are reporting that Civil engineering costs are forecast to rise 14% over the next five years to 1Q2029, while civil engineering tender prices are predicted to increase by 22% over the same period, according to the latest forecast data from BCIS.

New work infrastructure output rose by 4% in 2023 but growth is expected to decline by 1.4% in 2024, before recovering from 2025. Output in the sector is also forecast to rise by 16% over the next five years, driven by strong growth in the electricity sub-sector.