Summer slump sees main contract awards fall by 37%

Construction was hit by a slump over the summer with main contract awards diving by 37% in the three months to August, new research has found.

The number of main contracts signed during June, July and August was 27% lower than the same period last year, according to the report by data provider Glenigan.

Project starts were also down 22% compared to the previous year, while planning approvals fell by 10% during the period.

However, the number of planning consents in the quarter was 27% higher than the same period in 2022, pointing to a potential revival in project starts and main contract awards later this year.

Glenigan economic director Allan Willen said: “Whilst recent editions of the review have made for sobering reading, an impressive uptick in detailed planning approvals on last year should be welcomed, driven by a rise in a major (£100m plus) projects in the development pipeline since the start of the year including phase 2a of HS2. 

“This highlights the importance of the project to potential future industry workload. However, external market pressures continue to dampen overall project start performance, suggesting it will be some time before a return to market stability and 2021 levels of construction activity.”

Residential schemes performed the strongest out of all sectors during the period, with private housing starts increasing by 14%, although social housing fell by 19% in the same period.

Retail also bucked the trend, with starts jumping by 33% compared to the preceding three months, although they remained 24% lower than the previous year.

Industrial, education, utilities, and health and leisure project starts also fell back during the summer, while offices seeing a particularly sharp drop with starts down 25% to land at 44% lower than last year.

London saw the value of project starts tumble by 10% compared to the spring, finishing at 12% below 2022 levels, while the North-west and Yorkshire and the Humber also saw significant falls.

The only region to experience growth compared to a year ago was Northern Ireland, where project starts shot up by 80% compared to a year ago and 23% during the summer.