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This week we have seen an overall reduction in delayed projects and an increasing number of projects starting to reopen. We have also seen a significant increase in sites confirmed as open. We expect this trend to continue in the coming weeks.
Companies in the services and manufacturing industries reported a fall in activity. Inflation also started on a downward trajectory in March. Falls in the price of motor fuels and clothing were in the largest downward contributions to the change. Rises in air fares produced the largest upward contribution to change.
Headline inflation is expected to fall further over the coming months as demand for goods and services reduces. However, “lived inflation”, the products that are in demand and are actually being purchased, is running exceptionally high. We expect very serious spikes in inflation over the coming months across all goods where demand holds up or increases and supply constraints emerge.
Most companies’ experiences are now focused on the challenges of reopening sites and maintaining activity. Differences in activity among companies remains very large: from some reporting full closure of all sites, to partial opening, to essential sites only, to all sites unaffected.
Our survey responses continue to pick up acute materials shortages and supply chain issues. Around 50% of respondents are reporting significantly increased lead times getting materials to site.
Some manufacturers are returning to production, however, given the lead times for manufacturing and the current supply chain delays, it is likely to be several weeks before the supply problems are rectified. Several companies are reporting a severe slowdown in the planning and tendering process, however other companies are stating they have not seen a slowdown in activity so far.
This week we have seen a decrease in the overall number and value of delayed projects. Hopefully the scale of delays has now peaked and is now starting to decrease as sites reopen. At the same time, we have seen a large increase in projects confirmed as remaining open.
We continue to receive both new projects and decision updates from the planning process, however activity continues at the lower bounds of normal. New planning applications have recovered somewhat after several weeks of downward activity. We continue to be concerned with the volume of new contract awards., with information on tenders having also been similarly impacted.
Our activity has started to pivot to confirming projects that remain open rather than projets that are delayed. This week we have now confirmed even more projects as remaining open. We anticipate further increases over the coming weeks.
This week we have started to see a drop in delayed projects. Overall decreases in delayed projects are still small when comparing to the overall delayed value so far. Across the different sectors, Education saw the largest reduction in delays. Whereas the Commercial and Retail sector was flat and delays in the Industrial and Medical sector increased.
In London the reductions in delays were mainly residential projects restarting, whereas in the North West it was mainly Infrastructure and Medical projects, and in the East of England it was projects in the Education sector. Across some other regions of the UK new delays still appear to be occurring.
This week there has been a reduction in delayed projects both under construction and at the contract award stage, implying that a small number of projects are restarting on site but also being progressed at the contract stage.
The average value of projects impacted by Covid-19 remains concentrated in the £10-50m and £100-500m categories when considering project value. Most projects restarting activity have been in the higher value bands. Projects in the smaller value band of £1m to £10m are still increasing, though by a small amount.
We will continue to provide weekly updates, including themes we uncover as further information becomes available. For a more detailed review of the projects affected by COVID-19, please click here and get in touch.