Barbour ABI’s latest analysis reveals a staggering 14% decline in overall contract awards, with market confidence hitting a new low and planning applications plummeting by 23%
As 2023 nears its end, construction spending is reeling from a triple threat of rising interest rates, political instability, and persistent inflation.
Rising interest rates, political uncertainty and continued price inflation have left construction spending significantly depressed as the new year approaches.
Overall contract awards are down 14% year to date, with most sectors failing to match 2022 through to November, according to the latest analysis from construction analysts Barbour ABI.
Planning applications were down 23% compared to last October
Market confidence also remains low, with planning applications down 23% on last October.
In the year to October, planning applications trailed 2022 by 16%, with healthcare and industrial suffering the sharpest falls.
‘Poor contract awards were set against a backdrop of insolvencies and financial distress’
Commenting on the report, Kelly Forrest, Barbour ABI consultant economist, said: “Looking back across 2023, many of the fears we had at the beginning of the year were sadly borne out. The poor contract awards performance we are seeing is set against a backdrop of thousands of insolvencies and businesses in critical financial distress.
“Unsurprisingly, many businesses are expecting more of the same, with applications indicating many are withholding projects in the hopes of better financial news next year.
“Notably, residential applications were down a shocking 25% versus October last year and contracts were down 23% compared to November 2022.”
Infrastructure saw resilience amid the construction downturn
Infrastructure suffered weakness in 2023, but November was boosted by several £100m+ schemes, including work on the M5 and the expansion and refurbishment of Leeds Bradford Airport.
Spending hit £1.6bn, a third higher than a year earlier and 38% up on October.
November was also a better month for infrastructure approvals.
At £1.9bn, they were 26% higher than October though they continue to trail 2022 figures by 10%.
However, confidence is still low, with applications showing another monthly fall of 20%, following a disastrous 45% fall in September.
Looking ahead, approvals in the year to November are marginally down compared to 2022 – by just 1% – suggesting a stable outlook for demand.
Residential approvals bounced back to £3.7bn, significantly stronger than October and 3% higher year-on-year, due to large apartment schemes getting the green light.
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