Early signs of pipeline recovery offer cautious optimism for UK construction, despite persistent challenges, writes Barrett Harris.
Construction new orders are one of the most reliable leading indicators of future activity and capacity pressures in the UK build sector.
By capturing contractual intent before work begins on site, they offer an early view of the pipeline six to 12 months ahead and typically move ahead of data on output or starts.
Published quarterly by the Office for National Statistics (ONS) using Barbour ABI data from local authorities, both the value and volume series reflect client decisions made well before mobilisation.
The latest release shows a sharp rebound in Q3 2025: total new orders rose 9.8% quarter-on-quarter and 29.3% year-on-year, marking the fastest annual growth since Q4 2021.
This signals a strengthening pipeline, provided these orders translate into tangible output from mid‑2026.
Private industrial and commercial segments are driving this momentum: industrial orders more than doubled, while commercial orders rose 51.4%.
These gains reflect renewed confidence across logistics, manufacturing and office development, supported by easing inflation and stabilising interest rates.
Converting orders into output
New orders do not immediately translate into construction output. They represent contracts awarded, but converting these into onsite activity takes time.
The lag depends on design complexity, procurement routes, financing cycles and supply chain mobilisation.
These factors vary by sector: infrastructure faces the longest delays due to extensive pre‑construction requirements, while private housing moves fastest thanks to standardised designs, stable supply chains and pre-secured planning permissions.
Regional trends add nuance. London mirrors the national rebound, with commercial and industrial new work posting the strongest quarterly gains at 106.7% and 50.0% respectively. Meanwhile, Yorkshire and Humber saw notable growth in public new housing and infrastructure orders.
New orders alone do not tell the full story – the key question is how quickly they convert into site activity. Glenigan’s Construction Starts Index shows that year‑on‑year growth in starts only turned positive in the months before November, highlighting that the Q3 surge has not fully fed through.
Housing remains slowest to respond, held back by affordability pressures and ongoing planning delays.
Early-stage mobilisation
Non‑residential and civil engineering sectors, though smaller than residential, have shown greater stability through 2025.
Civil engineering activity held steady, while non‑residential starts strengthened in the latter part of the year.
This suggests parts of the Q3 2025 spike in new orders, particularly in industrial and commercial projects, are beginning to move into early‑stage mobilisation.
The lag between orders and starts remains clear, but the alignment between ONS new orders and Glenigan’s starts data indicates forward momentum is building, albeit unevenly across sectors.
Looking ahead to 2026, industrial work appears best placed to drive growth, supported by new orders and construction starts increasing.
Commercial activity is also increasing, though longer lead times mean its impact will emerge later in the year.
Housing, despite its scale, may remain subdued; however, falling interest rates could increase project viability and boost new orders.
Barrett Harris is a senior economist at Turner & Townsend.
