Key findings
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1
Construction activity on the rise
A 1.0% three-month growth in construction output to August, and a new orders surge of 16.5% in Q2 2024, is evidence of clearing project backlogs and increasing market confidence.
2
Significant budget allocations boosting the sector
The Budget has given construction a significant boost, notably allocating an additional £4 billion for education, including £1.4 billion for the school rebuilding programme, and reaffirming total investment in housing supply to over £5 billion.
3
Macroeconomic conditions supporting recovery
With inflation now relatively low at 2.3%, and the Base Rate cut to 4.75%, economic stability is fostering a favourable investment climate. The government's renewed focus on infrastructure investment underpins further sector growth.
4
Labour market and insolvencies
Construction sector vacancies fell by 2.7% in Q2 2024; however, contractor insolvencies rose by 19%, highlighting ongoing volatility in the supply chain and the labour market.
5
Material cost easing
The material price index for ‘all work’ decreased by 1.1% year-on-year to August 2024, driven primarily by falling steel prices (-7.3%). However, basic MEP components saw price increases, indicating ongoing inflation in specific sectors.
6
Regulatory impact on project timelines
Compliance with the Building Safety Act is extending project timelines, with estimates suggesting a 12 to 20-week increase in programme durations for larger developments, affecting planning and delivery schedules.
Economic indicators
GDP
Source: ONS – quarter to quarter change
2024 Q2
2024 Q1
Inflation (CPI)
Source: ONS – 12-month rate at end of quarter
2024 Q3
2024 Q2
Materials and Commodities
Source: DBT – 12-month rate at end of quarter
2024 Q3
2024 Q2
Labour costs
Source: BCIS labour cost index – 12-month rate at end of quarter
2024 Q3
2024 Q2
Government borrowing
Source: ONS – estimate of UK government debt
2024/2025
2023/2024
