What is hiding in the shadows?

In our summer report, we cautioned the need to buckle up. Now the autumn leaves are falling and with that comes further surprises …

Only three in ten of respondents to our survey said that materials prices are starting to settle. Soaring energy bills have reignited materials cost escalation for energy-intensive products, following a slowdown of increases over the summer due to falling commodities pricing and the global recessionary threat weakening demand.

Labour challenges remain, with six in ten of contractor respondents reporting availability issues and increases to labour rates noted by 76% of contractors during the third quarter.

However, supply chain disruption and materials and product availability issues appear to be improving, with half of survey respondents reporting that the challenges are settling, echoing other industry data.

Some signs of slowing down are starting to creep in; 27% of contractors and nearly 40% of non-contractors forecast tender opportunities will decrease in 4Q 2022, although only one in ten contractors said that tender opportunities reduced in the third quarter.

After a period of uncertainty, Liz Truss started boldly with big tax cuts — but rather than growth, the measures spooked the market. After a series of U-turns and a new chancellor, we saw Truss’ resignation and another Conservative Party leadership contest. Rishi Sunak became prime minister on 25 October.

Jeremy Hunt cautioned difficult decisions would come, with ‘reductions in spending or increases in tax’, or a combination of both, and as Rishi Sunak stepped up, he warned of ‘profound economic challenges’ ahead.

The push for net zero, energy security and improved defence means there is a strong long-term project pipeline. And although a recession looms over the industry, nearly 10% of respondents feel that it will not have a detrimental impact on construction and a further 60% believe that the impact will be neutral, helping the sector to stabilise after all of the challenges.

Of our survey respondents, over 80% said they had seen greater collaboration to overcome the challenges on projects. This spirit will need to continue to deliver projects and much-needed outcomes.

With such a backdrop, we wonder what other skeletons are in the closet.