Construction output
Overall construction output saw a rise of 0.5 percent in Q4 2024 compared to the previous quarter, marking the third consecutive quarter of growth. On an annual basis, output grew by 0.9 percent in Q4 compared to Q4 2023. While repair and maintenance activity has been a consistent support for output in recent periods, Q4 2024 saw new work taking the lead, increasing by 1.2 percent, while repair and maintenance fell by 0.4 percent. The private industrial sector led new work growth, expanding by 6.4 percent, largely driven by data centres.
Commercial property demand grew by 1.5 percent, while other sectors also saw growth, with public other work and private new housing increasing by 4.3 percent and 1.3 percent respectively. However, new public housing experienced a significant decline, falling by 7.8 percent in Q4 2024 compared to the previous quarter and a substantial 14.9 percent compared to Q4 2023, leaving it 33.0 percent below pre-pandemic levels.
Infrastructure output remained flat in Q4 2024. Despite no changes in output, there is optimism following recent announcements for major projects.
Source: Office for National Statistics
Construction new orders
New orders, a forward-looking indicator of future demand, in Q4 2024 painted a less optimistic picture for the near future of the construction industry, declining by 2.4 percent compared to the previous quarter. This decline led to a modest fall of 0.1 percent in new orders for the year.
Despite this poor activity, private new housing bucked the trend, registering a substantial increase of 24.0 percent compared to Q3 2024. Public housing, a much smaller market, also saw a modest increase of 1.5 percent. The impact of the Government's housing plans on these sectors remains to be seen.
Infrastructure new orders experienced a sharp decline of 23.5 percent in Q4 2024, following strong growth in Q2 and Q3. With the start of the five-year Asset Management Period 8 (AMP8) in April water companies in England and Wales will start a £104 billion capital expenditure programme. While this investment plan is to 2030, we still expect performance to improve later this year. Additionally, Heathrow is expected to provide its proposals for a third runway this summer, which would also boost the sector’s outlook in the coming years.
Private sector industrial work also saw another significant decrease, falling 19.7 percent on the quarter in Q4 2024. This comes after it fell 28.6 percent in the previous quarter. This suggests a potential slowdown in a sector that had previously seen strong growth.
Overall, the new orders figures present a mixed outlook. Further cuts in interest rates could potentially stimulate activity. However, elevated construction costs, labour shortages and high levels of sector insolvencies continue to pose major challenges.
Source: Office for National Statistics
