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This week the increase in open projects and the fall in delayed projects has accelerated. The increase has been shared across more sectors than recent weeks, with Residential, Infrastructure, Commercial and Hotel and Leisure sectors seeing significant changes. However, most changes have again been in London.
There remain concerns over the strength of the planning system. New applications remain stable at somewhat sub-normal levels, but decision updates have weakened.
Through our research findings we continue to pick up significant amounts of restarting projects. However, there is increasing news of redundancies, company insolvencies, and either voluntary or requested discounted of prices.
A raft of Markit/CIPS PMI surveys were released for the UK and other countries over the course of the week. They showed a recovery from the unprecedented falls in April, however they almost all universally remained in contraction, so activity continued to reduce.
Most significantly of the PMI surveys, the UK Construction Industry recovered somewhat in May but still saw its third-worst month in history. This means the industry disappointingly experienced a further serious contraction in May but to a lesser extent than in April.
As reported in previous weeks, the crisis has seen a record level of debt repayment. Bank of England data showed credit card lending has fallen when compared to 2019. The annual growth rate fell to the weakest level since August 2012.
This week we collected a significant amount of information suggesting further site re-openings; backed up by this week’s project data. A significant number of companies announced they are reopening sites over the next few weeks.
There however remain significant fears for the future. In May, more construction companies entered administration and more manufacturers are considering redundancies and/or the mothballing of their facilities.
We have picked up a small number of projects that have been delayed due to shortages of materials. We have also identified several reports of either requested or voluntarily discounting across sub-contractors and architects.
This week the value of projects confirmed open or restarting has increased. While once again most of the increase has occurred in the residential sector, the Infrastructure, Commercial and Hotel and Leisure sectors have also seen increases. London has seen the vast majority of the total change. The value of delayed projects has also reduced.
New planning applications remain fairly robust compared to pre-Covid. However, decision updates remain more depressed than previously. Contract awards and new tenders remain very subdued compared to Q1 2020.
Confirmed open projects have increased significantly over the last week. While the Residential sector again has had the largest increase this week, the changes have been shared more fairly with other sectors. The next largest increases are in the Infrastructure sector Commercial sector, and the Hotel and Leisure sector. We have seen lower increases in the sectors where there were fewer delays such as the Medical, Industrial and Education sectors.
London has dominated the changes this week with increases mainly in the Infrastructure and Commercial sectors. The next largest regions are the North West and Scotland.
The most confirmed open projects (relative to the sector size) continue to be in the Medical sector, followed by the Residential sector. The Industrial sector continues to have the smallest open projects, followed by the Hotel and Leisure sector. Across the UK, London has the highest number of open projects by a significant margin whereas the lowest levels of open projects remain in the East Midlands and Yorkshire.
We have seen a large increase in restarted projects this week. As with the open projects, the changes this week are spread across multiple sectors such as, Residential, Infrastructure, Commercial and the Hotel and Leisure sector. The Education, Industrial and Medical sectors have seen only small or negligible increases though these sectors have been less impacted by delays.
Most restarts have again centred around London, with other regions seeing smaller increases.
Once again, the Residential sector has by far the most projects returning to site, followed by the Infrastructure sector. Industrial sector remains the sector with least restarted projects relative to its size, though it does have the lowest amount of delays. London has the highest level of restarted projects by a long way, followed by Scotland and the North East of England, with the rest of the UK at lower levels. The East Midlands, Yorkshire, Wales and the West Midlands have the lowest amount of restarted projects relative to their size.
This week we have seen a fall in delayed projects. As in previous weeks the Residential sector has seen the largest fall in delays, however similarly as above other sectors have seen larger. London saw the largest fall which was concentrated in the Infrastructure and Commercial sectors.
Scotland remains the outlier in terms of remaining delays, however it is slowly catching up with the rest of the UK. Even with the large number of residential sector projects returning to site, the sector remains the most impacted, now closely followed by the Commercial and Retail sector. The Medical and Industrial sectors remain the least impacted by the delays.
We will continue to provide weekly updates, including themes we uncover as further information becomes available. For a more detailed review of the construction projects affected by COVID-19, please click here and get in touch.