What do you get if you put five economists in a room? Six opinions. It’s an old joke but it includes a timeless bit of wisdom: Economics is very hard to predict with certainty.
That said, a few months into 2023, it certainly feels like the recession isn’t as bad as many feared. As always, it’s a mixed picture: some people you speak to are experiencing a significant drop in demand; others are still riding high. But there are reasons to be cautiously optimistic about the outlook for the rest of 2023.
In a seminar held by Building magazine, Allen Wilen, the economics director at Glenigan, laid out the most recent stats on how construction is performing. On the surface, they make for quite sobering reading: New project starts are down 20% on the previous quarter – and that’s adjusted to compensate for the big dip that naturally occurs around Christmas.
Within that, new housebuilding projects were down 39%, commercial projects down 18% and public sector developments down 3%. However, Allen felt this sizeable dip was largely the delayed impact of Liz Truss’ disastrous mini-budget in the autumn. Since the start of 2023, the picture seems to be a lot more positive. Detailed planning applications, always a reliable indicator of what pipeline we can expect in the year ahead, are still very strong. In fact, they’re higher now than they were pre-pandemic.
Materials availability seems to be stabilising, and materials costs, while high, are now in gradual decline. The political situation also feels more stable, with both main parties broadly on the same page economically speaking, reducing the likelihood of further Truss-style shocks.
And, although it’s not been widely promoted in the media, last year brought an impressive jump in the UK’s economic productivity. While the labour force stayed flat, output increased by 5%.
For fenestration and construction more generally, there are key potential growth areas to keep an eye on. The logistics sector continues to boom and, while that’s likely to slow at some stage, it’ll remain a source of valuable work for hundreds of businesses around the country. We’re still seeing large amounts of activity in the office refurbishment market as businesses continue to adapt to changing working patterns following the severe phase of the coronavirus pandemic.
We’re likely to see further work from the office sector in the coming decade. During the building boom of the 1980s, thousands of office buildings were constructed around the country. Many of these are now in need of comprehensive refurbishment, which could provide another lucrative source of business.
As ever, despite the headlines, there are reasons to be cheerful.
Tim Ferkin
Managing director, Cotswold Architectural Products
