Construction activity in the health sector this year should benefit from the Government’s need to show evidence of good progress on its NHS investment and hospital rebuilding programme ahead of an election.

According to Glenigan’s January 2024 edition of its Construction Index, despite health construction project starts falling back 37% in the last quarter of 2023 against the preceding three months – to stand 41% lower than 2022 levels – the outlook for 2024 is more positive.

Glenigan is forecasting that the value of underlying starts in the health sector will rise by 11% in 2024, with a further small rise in 2025.

Significant new NHS projects due to get underway this year include the £43.4m Christie Hospital Advanced Scanning and Imaging Centre in Greater Manchester.

According to the report, across all construction sectors underlying project starts experienced a slight upturn during the final quarter of 2023, increasing 4% on the preceding three months when seasonally adjusted.

But the value of work starting onsite across all sectors fell by a fifth compared to 2022.

And it claims that 2024 commences on ‘a slightly-more-positive note’, following a ‘universally-grim 2023’.

Seasonal factors helped drag the value of project starts down during the final three months of last year.

However, when seasonally adjusted, starts actually rose 4%, compared to quarter three of 2023.

Construction starts across all sectors edged higher during last quarter of 2023

Commenting on the picture painted at the year’s outset, Glenigan’s economic director, Allan Wilen, said: “As expected, seasonal factors affected work commencing on-site during the final quarter of the year.

“However, after adjusting for the Christmas wind-down, starts managed to edge slightly higher during these three months.

“This was partly driven by a modest rise in private housing projects, indicating that developers may be entering the New Year with renewed confidence.

“Less encouraging were the declines in non-residential and civil engineering project-starts, which have continued to weaken.

“This suggests the construction sector can expect tough times in the near term and it means March’s Spring Budget will be hotly anticipated.

“Many contractors will be expecting the Government, especially in an election year, to clarify or update on the big infrastructure projects put forward in 2023, particularly following the rollback on HS2 plans last year, as part of a wider package to kick-start activity.”