Uptick in construction projects provides optimism

Published: 27-Jun-2022

Glenigan report reveals healthcare construction sector recorded an 8% increase in project starts compared to previous quarter

Healthcare construction projects starting on site in the three months to the end of May increased by 8% compared to the previous quarter, signalling an upturn in activity following months of uncertainty.

Figures have been released today by construction industry experts, Glenigan, as part of the June 2022 edition of its monthly Construction Index.

The paper focuses on the three months to the end of May, covering all projects with a total value of £100m or less.

And it reveals that, across all construction sectors, including healthcare, the value of underlying work starting on increased by 9% during the three months, but remained 19% lower than a year ago.

The health sector saw an 8% increase, unchanged from a year ago.

Glenigan’s senior economist, Rhys Gadsby, said this hinted at a change in fortunes for the industry.

He said: “This month we have seen a slight uptick in project starts, and this increase in work commencing onsite suggests much-desired signs of recovery after almost a year of decline.

“I am hopeful that the June index signifies a turning point for the construction industry following a very-challenging period.”

But the report warns that, while the past 12 months has seen a strong development pipeline of contract awards and planning approvals, external influences, particularly the fallout from the Russia-Ukraine War and Brexit, continue to send shockwaves through UK business and industry, with supply chains tightly squeezed throughout the first half of 2022.

Inevitably, this has led to building product and manpower shortages, as well as soaring prices, with construction material inflation rising around 25% year on year.

And this has resulted in significant delays to projects commencing onsite, as start dates are pushed back to accommodate higher material and labour costs.

“It is clear that, while the outlook looks decidedly more positive than in recent months, there is still some way to go before the sector returns to the levels of growth seen in spring/summer 2021,” the report states.

Gadsby added: “Sharp increases in labour and material costs have presented a challenging few months for the industry, but a near 10% increase in the value of project starts is a welcome change of direction, offering a promising outlook for the second half of 2022.”

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