Market Intelligence Reports
Latest Market Intelligence Report: Q1 2024
Data from the ONS shows construction output to have decreased throughout Q1 for both New Work and Repair & Maintenance, however, our trade subcontractors reported an increase in tender workload this quarter, suggesting that the road to recovery is complex with many factors influencing the market.
Insolvencies within the industry still remain a real concern with a high number of firms going into administration. This may be reducing the pool of suppliers available to bid and resulting in the remaining subcontractors experiencing increased tender activity.
Adrienne Turner
As a result, with mounting insolvencies our latest annual supply chain survey shows some subcontractors to have adopted a risk adverse approach with an increasingly selective view over the projects they choose to bid; with procurement factors such as main contractor solvency, high quality design information, and pipeline visibility heavily influencing bid decisions.
Past inflation is still causing affordability pressures on budgets and leading to elongated preconstruction programmes. Consequently, many projects are still subject to rounds of value engineering in order to achieve affordability, again contributing to high levels of tender workload amongst the supply chain but not necessarily increasing construction output within the industry.
The rest of the year will likely remain challenging, Mace Consult suggest that the recovery of the construction industry will not rebound until interest rates begin to fall, although interest rates have remained high in the year to date, there are expectations that these could be cut come June as services inflation and wage growth slows. However, Mace warn that a number of cuts will need to take place before developers’ confidence resumes and construction spending improves.