Overall, since the CPA’s last forecasts three months ago, firms across the supply chain report activity fell away in Summer and fell further in September.
Risks to the forecasts for both the UK economy and construction continue to remain on the downside but there are also positive risks. As a result, alongside the forecast it is important to note the CPA’s Key Risks (Page 13):
- UK Economic Growth and Inflation
- UK General Election
- Financial Sector Troubles
- The Availability and Cost of Labour
- Materials and Products Prices
- Contractor Insolvencies
Commercial activity is still strong for fit-out and refurbishment whilst conversions to residential in urban centres or industrial and logistics activity on the edge of cities remains high. In addition, activity on data centres and biotech facilities also remains strong but there are pauses for repricing on new commercial towers projects where main work is not already underway.
Industrial demand is still strong by historical standards for warehouses and logistics but new investment has peaked and output is likely to fall away towards the end of the year. Factories activity from investment decisions made in 2021 has largely now finished and activity down on the ground has already been slowing since 2022 Q4. Factories projects that finished last year were not replaced at the same rate as manufacturers’ investment decisions in Autumn 2022 were put on hold due to the economic and political uncertainty.