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Waiting for Growth
Even though the UK’s growth outlook continues to look weak, early signs of a turning point in the economic cycle are a positive for the construction sector. In the meantime, contractors will continue to face significant headwinds with respect to new workload, including political uncertainty, even as longer-term prospects improve. Construction, like the wider economy, is waiting for recovery – and growth.
UK Winter Market View:
UK construction markets are at a turning point. Two years into a deep cycle of monetary tightening, levels of output are high. However, forward indicators of opportunity point to a downward trajectory. Today’s resilient performance is partly a result of project delays. Contractors have stayed busier for longer than expected. However, recent orders for new projects have fallen by 20% in real terms compared to 2022. Whilst improved investor sentiment may point to project restarts in the future, at present, the near-term procurement pipeline is weaker than it should be. Even as material suppliers stabilise and demand for labour lessens, the key challenge for the construction sector remains the mid-term impact of an uncertain order book. Until there is firm evidence of a recovery in future workload, the outlook for inflation will remain downbeat.