Construction in motion

Here’s the thing: we were not expecting fireworks. What we saw instead was more interesting. What we saw in Q1 was not a slump. It was a slow, steady laying of track, and the train is starting to move.

We’ve been watching the numbers, the tenders, the policy papers, and the talk on-site. A flat market this is not. It’s a market holding its breath.

Something bigger is coming. All aboard.

Leaving the sidings

This may not be a shock to you. Construction output in Q1 dipped to its lowest point since the tail end of the pandemic. The March PMI sat at 46.4. This number tells you one thing: we were contracting.

Commercial work took a hit. Infrastructure slowed. Civil engineering ran at its steepest decline since October 2020.

Why, you may wonder, are we telling you this? Because it’s not the whole damned picture.

There were signs – admittedly, early ones - of life in key sectors. Public sector work, in education, and in healthcare, provided a little stability. High-rise approvals picked up in hotspots like the West Midlands and Greater (some might say Great) Manchester.

But the real headline has been infrastructure. The oft-reported greenlight for the Lower Thames Crossing – to the tune of some £9 billion – is a major, major vote of confidence, and a massive win for the sector as a whole. With the HS2 Euston tunnel and the TransPennine upgrade hot on its heels, there very well could be a good foundation for future commercial and residential development along these arteries.

 These are not isolated civils jobs. A road is no use if it’s not going somewhere people want to get to. Consider them launchpads for economic ecosystems.

Elsewhere, private housing starts are perhaps not breaking records, but they remain a crucial bellwether. When that sector turns, as we hope it will, it’ll bring the trades, suppliers and logistics with it.

On the right track

Here’s the rub: don’t expect a Q2 boom. Expect the sector to do what it does best, and build.

We think growth will be steady. Perhaps not spectacular. Glenigan forecast an 8% rise in project starts for 2025, with an additional 10% increase in 2026. Now, that’s not hype - that’s strategic momentum. Private housing is projected to climb by 13%, and offices are expected to rebound by about 18% this year.

But investors are circling again. Planning applications are rising. Consumer confidence is improving. Not surging, per se, but strengthening. The groundwork laid in Q1, both literally and figuratively, should start to show its face through site activity through Q2 and into the back end of the year.

As for us: we’re expecting education, light industrial and healthcare to remain strong in Q2. Retail and office refurb are due to start clawing back market share. The eagle-eyed amongst you should watch for early signs of regional growth in the South West (not that we’re biased or anything), the Midlands, and Northern powerhouse cities.

Bumps in the line ahead

For all this optimism, let’s be real. This is construction. We will inevitably battle a few headwinds. Many are battling them as we speak.

First: the skills shortage. Still biting. Still critical.

Over 250,000 extra workers are needed by 2028 – a demand that’s outpacing the current recruitment pipeline. The danger here goes beyond project delays, to potentially escalating costs, lower quality work, and slower economic recovery.

Second, and the elephant in the room: global supply uncertainty. Tariffs on UK steel exports to the U.S.  – yep, we went there - won’t likely directly cripple domestic build projects, thanks to a 25% levy, but they do add volatility to global markets.

Volatility breeds hesitancy. If price spikes in materials, like steel and aluminium, critical for structure amongst a vast heap of other construction products, could disrupt projects. Projects that may already be sitting on tight margins.

There is also the small matter of the wider, global economy. Interest rates, inflation, and geopolitical risk all have the potential to rattle consumer (and investor) confidence. If borrowing continues to sit high, some developers may sit on their hands until cost pressure starts to ease.

Our – perhaps a little biased – take: the best mitigation is local control. Onshoring manufacturing, and locking in stable, domestic industrial supply chains will help to provide stability in product availability and mitigate the risk of major cost wobbles. Take our word on this one.

Next stop, evolution

Think evolution, not revolution - although that will come. We’ll see evolution of longstanding trends this year. Sustainability, for example, is not exactly the new kid on the block. And it’s no longer optional, either. ESG targets are climbing the priority ladder for literally everyone.

Retrofit and repurpose are also on the rise. Office-to-residential conversions and refurbishments feed the market a steady stream of medium-scale jobs. Plus, tech-forward delivery is properly picking up the pace. Digital planning, AI-assisted tendering, and prefab componentry are all helping to make job sites a little more efficient. In our opinion, this is an area to watch. This momentum will not slow down.

Full steam ahead

We are not guessing. We’re preparing.

If you take one thing away from reading this, it’s that you should do the same. Our capacity expansion in Bristol was not a short term move for 2025 (it would’ve been a mighty expensive one, at that) -  it was a commitment to the market in 2026 and beyond . When the market lifts - and it will – don’t be playing catch up. Those who invested early will be the ones who deliver.

Our bet is on slow, confident growth through the rest of this year. It’s on public sector consistency, on infrastructure ripple effects, and on the steady return of investor confidence. But we’re not waiting for the market to turn. We’re building now.

This train is moving. Get on it.