The UK sectors generating genuine growth can be identified when comparing new orders with construction output
Private new orders provide an early indication of future construction activity because they measure the value of contracts awarded before work starts on site. However, the figures are reported in current prices and are not adjusted for inflation, meaning that increases in value do not always reflect growth in real activity.
Comparing new orders with construction output helps reveal the sectors and regions that are generating genuine growth, and which are being driven primarily by rising costs. With inflation rising in recent years, it is important to interpret this data with caution, as apparent increases in the value of new orders may reflect rising costs rather than genuine growth in construction activity.
London remains the UK’s largest market for private new orders, generating £13bn in 2025, almost a quarter of total activity. Commercial construction continues to dominate, with new orders reaching £9.3bn, up 72.6% since 2016. However, these figures should be treated with caution. New orders are recorded in current prices and therefore include the impact of inflation.
For context, the BCIS All-in TPI rose by 48% between 2016 and 2025, indicating that part of the observed growth reflects rising construction costs, not just an increase in real activity.
Beyond general inflation, the cost of new orders has also climbed due to regulatory and specification changes including sustainability, fire safety and evolving tenant requirements.
Figure 1: 2025 regional private new orders value (including inflation) since 2016
The UK’s South East (£6.1bn) and North West (£5.1bn) are the next largest markets, with similar broad-based prospects; some growth in housing and commercial, but the most pronounced structural shift is the surge in private industrial construction. Since 2016, industrial new orders have significantly outpaced inflation in Wales (+1331%), North West (+165%), South East (+149%), Yorkshire and the Humber (+124%) and South West (+101%).
Even allowing for inflation and Wales’s relatively low starting point, the scale of industrial growth is striking. Demand for warehouses, logistics facilities, advanced manufacturing and data centres has become one of the most important drivers of construction activity across several regions.
The regional pattern across the UK is equally clear. The North West, Yorkshire and the Humber, and Wales have long established industrial bases and are benefiting from investment linked to manufacturing, logistics networks, ports and renewable energy supply chains. In these regions, growth in new orders appears to have outpaced inflation over the period.
In contrast, private housing new orders have generally underperformed, reflecting higher borrowing costs, affordability pressures, softer demand, planning constraints and tight viability. Only three regions recorded growth between 2016 and 2025: North East (+54.6%), Scotland (+28.7%) and South-East (+16.1%).
The regions rely on different engines for growth. London and the South East are driven by commercial work; the North West, Yorkshire and the Humber, and Wales by industrial expansion; Scotland by both housing and industrial activity. The West Midlands stands out as the only region with a substantial fall in total private new orders since 2016 (28.1%).
Structural changes
New orders tell us where future work may emerge. Construction output, by contrast, shows where projects have actually progressed into delivery with an adjustment for inflation. Comparing the two provides a clearer picture of the structural changes taking place across the industry. Figure 2 shows that industrial new work output has grown markedly, commercial activity has contracted and private housing has struggled to gain momentum.
Industrial new work output is the clearest point of alignment between orders and delivery. Rising from £5.96bn in 2016 to £9.01bn in 2025, a 51.1% real-terms increase. This growth mirrors the surge in industrial orders across Wales, the North West, Yorkshire and the Humber, the South West and the South East.
Despite London’s large value of commercial new orders in 2025, national commercial new work output has fallen sharply. Commercial output fell from £37.9bn in 2016 to £23.2bn in 2025, a 38.8% decline, despite being adjusted for inflation. This could suggest the heavy concentration of commercial development in London and the South East, or that most of the growth seen in the new orders data reflects the increased cost of development, not overall growth in the sector.
Figure 2: Construction new work output (volume) by sector, 2016-2025 comparison
Private housing new work output sits between these two extremes. It has remained essentially flat, rising only from £39.8bn in 2016 to £40.6bn in 2025, a 2.0% increase. The brief post pandemic rebound in 2021-2022 faded quickly, and output returned to mid-2010s levels. This mirrors the UK’s regional new orders picture, which showed a lack of new activity.
Taken together, new work output and new orders data suggests a construction market where different sectors have grown at different speeds since 2016 and encountered different pressures and drivers.
Overall, the combined evidence from new orders and output points to a sector shaped by varied regional and sectoral dynamics, with industrial, commercial and housing activity each following distinct trajectories rather than a single uniform trend.
Barrett Harris is a senior economic analyst at Turner & Townsend.
