Mixed results for construction in January as planning approvals fall

Mixed results for construction in January as planning approvals fall

Barbour ABI has completed its latest snap analysis of construction industry performance for January, finding a mixed result across planning with a strong start for contract awards but slower performance across earlier planning stages.

Notably, residential planning approvals and applications fell to just £2.7bn and £3.6bn respectively against £3.4bn and £4.2bn averages in 2022. This highlights the continued impact of the cost-of-living crisis and suggests annual house-building targets may come under threat. 

Barbour ABI Chief Economist Tom Hall explained:

“Contract awards were £7.4bn in January: a positive rebound after December’s disappointing £5bn. The main contributors to the strong performance were the residential and industrial sectors, with £2.6bn and £1.6bn respectively. Only the commercial sector performed below the historical average, falling back by 18% to £600m following a good finish to 2022. However, January is often a good month and there remain many headwinds to contend with.

“Planning approvals experienced a weak start to the year, falling 34% to just £6.5bn, driven by large falls in industrial and infrastructure. Meanwhile, underlying activity for planning applications fell at the end of 2022 with notable falls in commercially sensitive sectors, such as residential. however overall activity held up thanks to the £4.1bn Berwick Bank offshore wind farm in Scotland.”

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