A market report from Arcadis says that the marginal growth achieved in the second half of 2024 means that things are looking up.
“The UK construction sector has reached a turning point, with marginal growth in late 2024 marking the end of contraction,” said Arcadis head of strategic research and insight Simon Rawlinson.
In fact, according to the Office for National Statistics, annual construction output in Great Britain increased by 0.4% in 2024 compared with 2023, making it the fourth consecutive year of annual growth, but 2024’s growth was much weaker than the 2.0% seen in 2023.
And 2025 does not appear to have started well, with two months of shrinking activity, according to monthly survey of construction purchasing managers. February’s Purchasing Managers’ Index (PMI) sank to its lowest reading since May 2020 in the time of covid lockdowns.
Despite claiming the ‘contraction has ended’, Arcadis recognises the headwinds: low confidence, high finance costs, and sluggish growth continuing to hold back recovery. Any meaningful rebound is unlikely until the autumn, it says.
Having said that we've turned the corner, even the bullish Simon Rawlinson is not all Tigger. “The outlook remains uncertain," he added, "with a weakening future pipeline posing a serious concern."
Turning more Eeyore as he speaks, Rawlinson concluded: “New orders have dropped sharply, and while infrastructure investment is set to rise, commercial and residential recovery remains sluggish due to low confidence and high finance costs. The shift towards low-rise residential schemes highlights ongoing regulatory challenges, while resource constraints in the resilience [i.e. utilities] sector could drive inflationary pressures. Without renewed investor confidence and strategic government action, a sustained recovery is far from guaranteed.”
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