Is construction slowing down?

By Ella Brocklebank Head of Communications and Business Development, Jenner Group

Despite its necessity and importance to provide society with the homes and infrastructure we rely upon every day, construction is always first and hardest hit when economical pressure rises. And yet despite this downturn the industry feels busier than ever as construction businesses work harder and harder just to survive.

Having covered a breadth of issues over the years; from post-Covid recovery to mental wellbeing and resilience and the need to readdress the gender imbalance in the industry, this one really got me thinking.

Whilst I have my own opinion (of course, I always do!) and can offer the viewpoint from a main contractor perspective through my role at Jenner, to answer this accurately I felt the need to reach out to some of my trusted industry colleagues to see how this question, and indeed the answer to it, would vary depending upon which part of the construction process you are immersed in. Speaking to a mix of industry counterparts at all stages of the supply chain, from lead consultants through to trade subcontractors and material suppliers, the answer is a resounding YES, the industry has undeniably slowed. That comes as no surprise given the enormous pressures placed upon us in a post-pandemic, politically changing world.

This was clearly evidenced when I spoke with David Smith, Director of Strategic Partnerships from the South ast Consortium S C a framework used to procure a multitude of public sector projects, who has witnessed a 30% slowdown in the last 12 months based upon the commercial run rate of over 500 live contracts. This data, backed by the opinions of other main contractors who have shared their experiences, strongly indicates that the public sector has been hit the hardest but essentially client confidence whether from public or private investment has been at an all-time low owing to exponential increases in build costs, soaring energy rates and the continuous barriers to bringing-forward land suitable for development. Add to that the struggles to secure funding and bonds, the increased costs of borrowing and rising interest rates and it is clear to see why we are where we are. Ultimately, construction relies on the ability and confidence of businesses and consumers to spend, and both have been severely lacking for far too long now. Clients have been nervous to build, and understandably so.

Despite its necessity and importance to provide society with the homes and infrastructure we rely upon every day construction is al ays first and hardest hit when economical pressure rises. And yet despite this downturn the industry feels busier than ever as construction businesses work harder and harder just to survive, with the sector openly documented as suffering from more insolvencies than any other according to Construction News, making up to one in five business collapses last year. With figures unveiled by the uilding Cost Information Service (BCIS), construction accounted for 17.4% of all insolvencies in 2024 which represents a 7.6% increase from 2023 and a staggering 36.8% increase since 2019. Sadly, the facts and figures do not lie, and the statistics are eye-wateringly alarming. It leads me to readdress the question and investigate not IF construction is slowing down, but WHY are we an industry preverbally on its knees, and is this set to change? www.jenner-group.co.uk

My brief research, as I imagined it would, interestingly indicates that the degree to which construction activity has reduced does vary sector-by-sector. Residential has probably seen the biggest reverse particularly within Kent, likely owing to the prevailing nutrient neutrality issues that have plagued this sector and stalled so many viable sites and continues to do so. Volume housebuilding has dramatically reduced as high interest rates and difficulty borro ing has suppressed demand and this has had lasting impact upon contractors and their supply chains with many businesses staffed to deliver well beyond current demand. But, and thankfully so, there seems to be a cautious uprising as evidenced by an increase in brick deliveries hich is al ays a firm indicator of construction activity, rising for the fourth consecutive month this year (April 2024) according to the Department for Trade & Business. This can only be a positive sign as indication of more starts on site and essential resurgence, even if numbers remain substantially lower than the 2018-19 average.

For us at Jenner we have followed this trend, and it has been the care sector that has been surprisingly strong, perhaps owing to an ageing population in good health and wealth and the strength of demand this has created which we had not foreseen. Evidently one thing is for sure, the past few years have been predictably unpredictable, so a little bit of stability and future certainty would go a long way right now.

Where you place within the lifecycle of construction ill also in uence ho you vie the industry at present. Whilst contractors are still waiting patiently for bluer skies, many professional consultants have spoken ith are definitely seeing a elcome and newfound upturn with paused projects suddenly pushing forwards, suggesting that whilst the nervousness still remains, clients are making the bold decision to just get on with things. This will of course bear fruit for contractors and their supply chain in due course, albeit some six to twelve months down the line. Nonetheless to have a strong pipeline of opportunity on the horizon is most certainly reason for optimism and greater confidence for the industry in future. Many trades are adapting to changing demands with regeneration and refurbishment projects on the increase most notably retrofit pro ects dominating the market through implementation of rene able technologies to create energy efficient properties from existing stock. Perhaps a reminder to us all that to survive we need to be ready to adapt and change.

What find most encouraging is the clear indication from those whose opinions I highly value having truly lived and breathed one of the most challenging of times in construction history, that we may be about to turn the corner. Many developers have openly exclaimed that whilst the remainder of this year ill continue to atline should be incredibly buoyant, it could even “go crazy”. But to make this happen we need to see the immense pressures placed upon us, responsible for the monumental industry downturn, lifted so we can get back to building again and to do so ith a good degree of profitability and prosperity. Perhaps the recent change of Government might help to reduce the red tape and bureaucracy that has shackled us for too long, but for now we’ll have to watch this space!

Many trades are adapting to changing demands with regeneration and refurbishment projects on the increase, most notably retrofit projects dominating the market through implementation of renewable technologies to create energy-efficient properties from existing stock. Perhaps a reminder to us all that to survive we need to be ready to adapt and change. ❜❜