The total value of construction work approved by councillors has plummeted, new data shows.
A report by sector analyst Glenigan found that detailed planning consents averaged £8.9bn per month between August and October. This was 23 per cent lower than the previous three-month period – and a two-fifths fall compared with August-October last year.
An average of just £2.5bn of major projects – those worth at least £100m each – was approved per month during the three-month period. That was 70 per cent lower on a year-by-year basis, according to Glenigan.
Underlying consents fared slightly better, dropping just 8 per cent compared with August-October 2023.
Industrial approvals almost halved to £1.6bn during the latest period, while office consents totalled £2.2bn, 41 per cent lower than the same period last year.
In the healthcare sector, approvals dropped by more than half to £761m.
At £3bn, detailed planning approvals for civil engineering fell by more than four-fifths and the value of retail schemes that secured consent also fell on a year-on-year basis in the latest three-month period.
Despite the declines, the data showed some bright spots. In the residential sector, detailed planning approvals totalled £14.9bn for the three months, 3 per cent up on last year.
Education consents rose by more than a tenth to £1.5bn. The hotel and leisure sector also saw a small growth in consents.
Meanwhile, an average of £8.7bn of work started on site per month during the quarter, 7 per cent up on the equivalent period last year.
Main contract awards averaged £9.2bn per month, up by 14 per cent year on year.
Glenigan economics director Allan Wilen said a recent deterioration in the number of project starts had “eased off”.
“This will come as a huge relief across the entire construction supply chain,” he said.
“Modest growth in both the residential and non-residential sectors, while not spectacular, is encouraging in an otherwise challenging environment and verifies our prediction of gradual recovery next year, and in 2026.”
He added that measures in the Autumn Budget of 30 October could provide a further boost to the sector.
“The chancellor’s changes to the fiscal rules will release funds for investing in schools, health, infrastructure, industrial and social housing, providing extra work for the industry,” Wilen said.
“Further, it will allow projects like the HS2 Old Oak Common to Euston extension and the TransPennine upgrade, which have been hanging in the balance over the last four months, to get off the ground.”
Glenigan’s sector snapshot came days after the Office for National Statistics released its latest monthly and quarterly construction output data. It showed an increase of just 0.1 per cent in September. New orders decreased in value by a fifth in July-September compared to the second quarter (Q2) of this year.
And a survey by the Construction Products Association (CPA) showed that sales of ‘heavy side’ products – structural materials such as concrete and steel – were lower in Q3 this year compared to the same period in 2023.
CPA head of construction research Rebecca Larkin said: “The green shoots of recovery have emerged slowly over the last two surveys and appear fairly tentative so far.
“The sharp falls in construction activity in two key markets for product manufacturers – new-build housing and housing repair, maintenance and improvement – as well as the cancellation of several large road projects have had a stark impact on manufacturing operations, with heavy-side capacity reined in.
“Although a return to growth over the next 12 months was widely expected in the Q3 survey, low-capacity utilisation, which tends to be due to mothballed production lines, can take time to restart.
“Wages and salaries registered as one of the primary drivers of input-cost inflation in Q3. Subsequent announcements in the Autumn Budget of a 6.7 per cent increase in the National Living Wage and the rise in employers’ National Insurance contributions from next April will only add to headwinds as the construction and product manufacturing recoveries try to gain pace.”
