Project starts in construction have shown signs of recovery after increasing by 3 per cent in the three months to November, according to the latest data from Glenigan.
However, the data intelligence provider also found that residential construction remain a drag on the sector.
And the weak performance in terms of new orders continued last month, an S&P Global analysis shows.
The December edition of the Glenigan index, which captures sub-£100m projects, shows the number of site starts was 3 per cent higher than during the previous three-month period (August to October).
But project starts were still 4 per cent lower than the level recorded by Glenigan for September to November in 2024.
Glenigan highlighted continued weakness in the residential sector, where construction starts fell by 6 per cent compared with the previous three months and 18 per cent on a year-on-year basis.
In contrast, non-residential work saw a 14 per cent increase compared with August to October this year, with a 15 per cent year-on-year growth.
Office and industrial schemes were the main drivers, Glenigan said, citing work such as Wates’s £85.9m One Hanover Street office development in London’s Mayfair.
Civils activity increased 4 per cent on the previous three-month period but remained 1 per cent below the level recorded in 2024.
Infrastructure site starts rose 12 per cent compared with August to October, although Glenigan said utilities schemes declined by 5 per cent.
London posted the strongest regional performance, with starts rising 56 per cent on a year-on-year basis.
Activity in the South West and North East also improved, Glenigan said, while the North West, South East and West Midlands all experienced year-on-year declines.
Glenigan economics director Allan Wilen said the latest figures were cause for cautious optimism.
“While performance was generally weak in most areas of the construction industry, the decline was less severe than we’ve seen in other months,” he noted.
The situation for construction could have been a lot worse, Wilen added, “given the backdrop of volatile global markets, wild political speculation and policy false starts”.
Referring to last week’s Autumn Budget, he said there would be “industry-wide fingers crossed” that stated commitments to capital projects and upgrades would translate into “concrete funding”.
But the latest construction PMI figures from S&P Global, released yesterday (4 December), revealed an 11th consecutive month of falling new orders.
November’s score of 39.4 was the lowest recorded since May 2020, when almost all housebuilding stopped and many other sites were shut due to the Covid pandemic. A score below 50 represents contraction while a figure over 50 signals growth.
Julie Palmer, managing partner at insolvency specialists Begbies Traynor, said this reflected the “demolishing of confidence in the sector and the subsequent downing of tools as the UK held its breath in the run-up to the Budget”.
A “confidence chasm is stifling growth for the sector, risking more closures of vital smaller businesses at a time when projects need talented workers”, she added.
“With data showing residential, commercial and civil engineering projects all down amid the backdrop of ambitious targets and housing demand, the industry desperately needs to feel that rising costs, materials inflation, skills gaps and supply chain issues are being dismantled by policy decisions.”
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