New orders in the construction sector rose 26.6 per cent in early 2025, signalling growing momentum, but poll reveals industry confidence remains cautious amid rising labour costs, workforce plans scepticism, and the delayed publication of the government’s long-promised project pipeline.
The latest construction industry ONS data revealed the sector is showing signs of recovery, with new orders rising sharply in early 2025, with the value of main contractors’ future workloads reaching £11.6 billion in Q1 – up 26.6 per cent from the previous quarter and 10.5 per cent year-on-year.
This uptick follows a series of recent government announcements, including Chancellor Rachel Reeves’ spending review and long-term infrastructure and industrial strategies. However, industry confidence remains cautious.
According to a poll of more than 300 construction professionals, conducted by the Building Cost Information Service (BCIS), which provides cost and data analysis for the industry, only 9 per cent believe the government’s plans will have a “very positive” impact, while 35 per cent expect a “slightly positive” effect.
Nearly a quarter (24 per cent) remain unsure, and 14 per cent anticipate a negative outcome.
Dr David Crosthwaite, chief economist at BCIS, pointed to a key concern.
“Between the firms who will deliver the work, who need time to plan for delivery, and those who could invest in the work, who need to see a solid pipeline of work coming down the line, everybody is still really in the dark,” he said.
Meanwhile, cost pressures and labour concerns also persist in the sector.
Although the latest Department for Business and Trade’s monthly statistics of building materials and components found that material price inflation had eased since 2022, price indices remain far higher than they were historically, and significantly above consumer price inflation indices.
This resulted in 70 per cent of professionals polled expecting costs to rise over the next year, especially labour costs, which BCIS forecast to increase by 7.1 per cent annually.
More labour will be needed to take the UK Government’s 10-year infrastructure strategy, with the Construction Industry Training Board earlier this year revealing that 251,000 extra construction workers were required by 2028 to meet demand.
But despite a £625 million government pledge to address workforce shortages, 37 per cent of respondents still expect labour availability to worsen.
“The outlook is certainly more positive, but concerns remain around the industry’s capacity to respond at pace, especially in the absence of a clear project pipeline,” added Dr Crosthwaite.
“For both public and private stakeholders, confidence and readiness hinge on that visibility.”
The government has advised the infrastructure project pipeline, alongside an interactive portal, will be launched this month.
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