Coronavirus Market Update – 10th July 2020

It’s been two weeks since our last update, and what a two weeks it’s been, with several announcements by the Government that put the construction industry at centre-stage in leading the UK’s economic recovery.

With the Prime Minister announcing his plan to “Build build build” and the Chancellor setting out schemes to help make our homes and public buildings greener, the Government is set to invest billions into UK construction.

This investment is a key factor in the expected recovery that we outlined in our latest construction industry forecast, published last week. The forecast projects that public sector and civil engineering projects will be the key drivers for growth over the next two years. If you haven’t read our forecast yet, you can download a copy on our website.

So, great news for long-term investment in the industry, but let's take a closer look at how the market is performing today.

The latest Glenigan Index confirms that May marked the low point for the industry, with the value of underlying starts improving last month. Overall, the value of underlying starts in Q2 were 45% down on a year ago, but starts in June were just 15% lower. And with lockdown restrictions easing further at the beginning of July, this will encourage more work in the development pipeline to proceed to site during the third quarter.

A further 229 suspended sites have reopened since our last update, which now means just 6% of sites in England are still on hold, and 9% in Wales. Scotland and Northern Ireland are lagging behind, at 55% and 34% respectively, but we know that many contractors are continuing a phased approach to reopening their sites, so we expect to see sites continue to reopen at a fairly steady pace going forwards.

A marked improvement in the number of bidders over the last fortnight also points to a strengthening in starts during the third quarter. An average of 86 new bidders a day were added against projects during the last two weeks. This is a 10% jump on the preceding two weeks and also similar to the daily averages seen earlier this year, prior to the lockdown. The strong performance over the last two weeks demonstrates that there is a significant pool of work currently out to tender.

Looking to future development activity, the planning pipeline remains steady. The number of planning applications being published by planning authorities has averaged 1,535 a day over the last fortnight. This is unchanged on the previous two weeks and just 2% lower than the daily average seen earlier this year, prior to the COVID-19 lockdown.

At 1,350 the daily average number of published planning decisions was 6% down on the previous fortnight and 14% lower than the average seen prior to the lockdown. The drop in decisions was led by a decline in householder projects. In contrast there has been a strengthening in decisions for larger construction projects of £250,000 or more.

So, there’s lots to be encouraged about in today’s update, with both short and long-term views showing positive signals for the construction industry.

Of course we need to be mindful not to overlook the challenges facing businesses and individuals right now, but it’s reassuring to see a positive road-map for recovery emerging now, for the future.

If you’d like to get involved in the work announced recently, or would like to take advantage of current opportunities, then please do get in touch; we’re here to help.