Tides turn for construction industry as new orders tick up in Q3, says RSM

In September 2023, the volume of monthly construction output increased slightly by 0.4%, after a slight decrease in August. The increase in monthly output came from an in repair and maintenance of 2.1%. 

The main sector contributor to the monthly increase was private housing repair and maintenance, which increased 3%. In Q3, total new orders saw an increase of 3.9% compared with Q2, which came solely from growth in September 2023 after two months of falls.

Commenting on the construction output data Kelly Boorman, partner and national head of construction at RSM UK, said: ‘September’s slight increase in construction output brings welcome news for the industry, which, bolstered by quarterly growth in Q3, indicates that the tides may be turning after months of challenging market conditions. 

‘The 3.9% uptick in new orders in Q3 suggests a much-needed change in momentum for construction businesses, and with interest rates reaching their peak and inflation starting to come down, cost of corporate debt should begin to reduce and in the longer term mortgage rates should fall to levels that stimulate the housing market. As supply continues to pick up, material prices stabilise and new works tendered at improved margins, construction businesses have reason to be optimistic about future activity. 

‘However, it’s hard to paint a clear picture about long-term pipeline following the announcement that HS2 has been axed, so what industry needs now is clarity from the government on its intentions to reutilise HS2 sites to build more regional and local affordable housing, which will help stimulate local communities and address housing targets. With GDP falling flat in Q3, this could be the turning point for construction, but, infrastructure projects take time to procure and mobilise, so government needs to address this urgently.’