Construction outlook: poll of industry professionals

The latest new orders data – showing the value and volume of main contractors’ potential future activity – indicated a more positive picture in the first few months of the year than recent quarters have shown, with a commitment to £11.6 billion of new work across the sector. This represented a 27% increase between 4Q2024 and 1Q2025, and an 11% rise on 1Q2024.

The government will certainly have been hoping to inspire further optimism in the sector with its recent raft of announcements, from the Spending Review delivered by the Chancellor a few weeks ago to its 10-year infrastructure and industrial strategies published since.

But how convinced are industry professionals by the government’s progress almost one year after taking office?

In a BCIS poll (during our latest construction outlook webinar) of more than 300 professionals, predominantly cost consultants and surveyors, fewer than one in ten (9%) said they thought the Spending Review and successive strategies announced by government in recent weeks will have a ‘very positive’ impact.

35% said they expected a ‘slightly positive’ impact, while one-fifth didn’t think they will make any difference. 10% said they thought they will have a ‘slightly negative’ impact, while 4% are expecting a ‘very negative’ impact. Many in the industry clearly remain to be convinced – almost one-quarter (24%) of those polled said they don’t know what their reaction to all the announcements is.

Dr David Crosthwaite, Chief Economist at BCIS, said: ‘The main problem in terms of inspiring confidence in the sector is that, despite a flurry of publications from government in the wake of the Spending Review, we still don’t have sight of the long-promised project pipeline. 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.’

The project pipeline is due to be published in July, complete with a bells and whistles interactive digital dashboard for users to interrogate its contents. Meanwhile, an uptick in demand levels certainly seems on the cards for the professionals we polled too; when asked about their workload expectations for the next 12 months, 47% of respondents predicted a rise, while 33% expected it to stay the same. Only 9% anticipated a decrease in workload, with 12% unsure.

Input cost expectations

Materials cost inflation has been moderating since peaking in 2022 and annual growth in the BCIS Materials Cost Index was in negative territory from 3Q2023 to 2Q2024. Forecast figures for 2Q2025 show 0.3% annual growth in the index.

When we asked respondents about their expectations for materials costs over the next 12 months, 70% predicted an increase, 20% expected them to stay the same, and only 1% believed they would fall. 9% were uncertain about what lies ahead for material costs.

Labour costs continue to be the major driver of project expenses, and though annual growth in the BCIS Labour Cost Index had eased at the beginning of the year, increases to employers’ National Insurance contributions and the National Living Wage in April have fed into an expected 7.1% annual increase in the index in 2Q2025.

According to our poll, 70% expected labour costs to rise in the next 12 months, while 21% believed costs will stay the same. Only 2% predicted a decrease, while 7% were unsure.

The issue of labour availability continues to be a concern, despite a commitment by the government to significantly boost the construction workforce. Recent announcements from government have included the establishment of a Construction Skills Mission Board in collaboration with the Construction Leadership Council, which aims to recruit an additional 100,000 workers a year by the end of this Parliament, though it is not clear where those workers will come from.

This is on top of a pledged £625 million investment to tackle the construction skills shortage by training up to 60,000 new workers.

Our polled professionals were not convinced there is going to be a marked difference in the workforce in the coming 12 months. When asked about labour availability over the next year, 40% of respondents said they expected it to remain unchanged, while 37% expected availability to worsen. Just 10% said they anticipated an increase, with 12% unsure of what will happen.

Dr Crosthwaite said: ‘Market conditions have shifted significantly since the start of the year, with output on the rise and further growth forecast this year, accelerating next year. New orders are increasing, suggesting a strengthening pipeline, and recent government announcements signal a welcome return to major investment in built assets.

‘While materials cost inflation is easing, labour costs remain a key driver of rising project costs, and tender price growth, currently stagnating, could accelerate rapidly if demand continues to build and labour remains in short supply.

‘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. For both public and private stakeholders, confidence and readiness hinge on that visibility.’

You can access the construction outlook poll results here.

Latest building forecast

Latest infrastructure forecast

Latest maintenance, cleaning and energy forecast

To keep up to date with the latest industry news and insights from BCIS, register for our newsletter here.