CONSTRUCTION OVERVIEW
New works up third month running
Construction output in Q1 grew by 0.3 percent from Q4 2024, the fourth consecutive quarterly rise. On an annual basis, output was up by 1.2 percent in Q1 2025 compared to Q1 2024.
While repair and maintenance activity accounted for a significant share of total output in 2024, in Q1 2025 new work increased by 1.0 percent on the quarter, with repair and maintenance falling by 0.6 percent.
Industrial sector new work expanded by 8.3 percent, with data centre and warehouse construction both growing rapidly. Output in new private sector housing has grown for three consecutive quarters, posting a 3.7 percent increase on the year in Q1 2025.
The competing power needs of different construction sectors is causing project delays in some parts of the country, and the resulting tension is explored in detail in this edition of the report.
Meanwhile in the Spending Review, the government confirmed an investment of £39bn for a new 10-year Affordable Homes Programme, in what is set to be the biggest boost for social and affordable housing in a generation.
Source: Office for National Statistics
Rebound in new orders
New orders, a forward-looking indicator of future demand, grew by 26.6 percent in Q1 2025 over Q4, almost totally offsetting the contraction seen in the second half of 2024. On an annual basis, new orders grew by 10.6 percent in Q1 2025 compared to Q1 2024.
This robust quarterly improvement was flattered by infrastructure, which saw new orders more than double (up 127.8 percent) in Q1 compared to Q4 2025. We are now expecting significant investment in water, energy, and aviation to spur further growth over the next five years.
Total construction new orders increased in most sectors, suggesting the future pipeline of work may be growing. However, new orders for private housing declined, which could make the government’s housebuilding targets even harder to achieve.
In the June Spending Review, the government revealed plans for a significant investment in defence, including the refurbishment of military accommodation and six new energetics and munitions factories. Plans to build and maintain flood defences for 2026-29 were also announced.
Source: Office for National Statistics
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