Strong pipeline for future construction

UK construction output experienced the fastest downturn for almost 11 years as emergency public health measures to halt the spread of coronavirus 2019 (Covid-19) led to stoppages of work on site, and a slump in new orders, according to the latest IHS Markit/CIPS UK Construction Total Activity Index.

Lower workloads and business closures resulted in a marked reduction in staffing numbers across the construction sector during March, and companies recorded intense supply chain pressures in March as the Covid-19 pandemic resulted in reduced capacity and shortages of stock among vendors.

While IHS Markit and CIPS said survey respondents are more pessimistic about the year ahead outlook than at any time since October 2008, Glenigan announced that all was not doom and gloom.

The market analyst said that, at present, 25% of all UK construction projects currently on site (with a total market value of £55 billion) are suspended, which is 34% of the total value of all work under-construction.

However, while this is having a severe and immediate impact on the industry, a firm development pipeline demonstrates that longer term opportunities remain.

As Covid-19 started to shut sites down in March 2020, there was a significant increase in the volume of planning approvals versus any of the previous 12 months, with health, community and amenity, education, and social housing sectors offering the greatest opportunities for the future.

The north east, north west, and Wales saw the highest growth in planning approvals of all the UK regions.

“Although firms are struggling to overcome herculean issues now, those that can spare some focus on the future will see that there is opportunity, and indeed, hope,” Glenigan said.