Recovery for the construction sector remains “uncertain”, according to new data published by Arcadis.

It’s Spring Market View says the long-awaited turning point for the UK construction sector has arrived, with marginal growth achieved in the second half of 2024.

But despite this positive shift, caution remains as new orders have fallen sharply, dropping nearly 20% since July.

With low confidence, high finance costs and sluggish growth continuing to hold back commercial and residential recovery, any meaningful rebound is unlikely before late 2025.

The Arcadis report comes days after the latest S&P Global UK Construction Purchasing Managers’ Index (PMI), published last week.

It showed UK construction had been through its worst month in almost five years. Steep declines were seen in housing and civil engineering activity during February, with the speed of decline accelerating considerably since the start of 2025.

Simon Rawlinson, Arcadis head of strategic research and insight, said:  “The UK construction sector has reached a turning point, with marginal growth in late 2024 marking the end of contraction. However, the outlook remains uncertain, with a weakening future pipeline posing a serious concern.

“New orders have dropped sharply, and while infrastructure investment is set to rise, commercial and residential recovery remains sluggish due to low confidence and high finance costs.

“The shift towards low-rise residential schemes highlights ongoing regulatory challenges, while resource constraints in the resilience sector could drive inflationary pressures.

“Without renewed investor confidence and strategic government action, a sustained recovery is far from guaranteed.”

The Spring Arcadis Market View sets out how, in the residential sector, developers are pivoting towards low-rise schemes in urban areas to navigate Building Safety delays, while infrastructure investment is set to surge following Ofwat’s confirmation of a major expansion in water programmes.

Despite a weak first half, new build construction output increased for the second consecutive quarter in Q4 2024, driven by rising demand in the public-non-residential and industrial sectors.

However, overall new build workload remains well below 2022 and 2023 levels, with total output in 2024 down 5.3% year-on-year in real terms. More concerningly, the future pipeline is weakening, reflecting the wider economy’s stagnation.

With stalled new orders and ongoing economic headwinds, construction firms are left wishing and hoping for market conditions to improve.

Without a revival in investor confidence and decisive policy action, Arcadis says a sustained recovery remains far from certain.

The report adds that while government reforms aim to deliver long-term growth, the short-term outlook remains challenging.

The timing of public investment in building projects is dependent on the Comprehensive Spending Review and local government devolution, leaving developers with limited options to overcome viability constraints.

Arcadis’ Market View examines current market conditions affecting major sectors in UK construction markets covering resilience, mobility and places.

It says the resilience sector in particular is emerging as a key driver of UK construction activity, with significant investment in energy transition, water infrastructure and flood protection.

The £20bn ASTI transmission programme and £44bn allocated to water network enhancements present a substantial pipeline of work.

However, with AMP8 progressing and renewables investment accelerating under planning reforms, pressures on labour and supply chains could challenge delivery, potentially driving inflation and increasing competition for industry capacity.

It says the mobility sector is at a “turning point”, with major planning decisions on Lower Thames Crossing and airport expansions expected to drive private investment.

Delays to road programmes and HS2 reprofiling may ease resource constraints, while smaller-scale road schemes create new opportunities for mid-sized contractors amid shifting infrastructure funding priorities.

The places sector, which spans public and private investment in buildings ranging from housing to schools, hospitals, and commercial office development, is seeing renewed focus on public sector opportunities.