Architects’ confidence rebounds in early signs last year’s output slump could be on the turn

Confidence in the architecture profession about future workloads has rebounded in the first signs that a slump in construction output last year may be turning a corner.

RIBA’s Future Trends report for January found architecture practices at their most confident since last July, with the survey’s workload index jumping into positive territory for the first time in four months.

The index rose eight points to +3 in January, with 27% of practices expecting workloads to rise in the next three months compared to 25% who expect a fall. Any index above zero indicates surveyed practices on average expect increasing workloads.

The survey found increasing confidence in all regions, with the North of England the most positive with an workload index of +17, while London’s rose from zero in December to +4 in January.

There was also cause for optimism in the survey’s staffing index, with the permanent staffing index holding steady at -1 but the temporary staffing index rising five points to +6, while the overall staffing index for larger practices remained firmly positive at +29.

Meanwhile, a tender price inflation report by cost consultant Gardiner & Theobald found early signs that investor confidence could be returning following months of uncertainty in the second half of last year caused partly by the delayed Autumn Budget.

The consultant’s latest tender price inflation report said greater post-Budget clarity and expectations of interest rate cuts this year meant delayed schemes, particularly in the commercial sector, were beginning to re-engage with potential for momentum to build over the course of the year.

But the firm cautioned that continued cost pressures on firms including persistently elevated wage growth, labour supply constraints and rising prices for materials including copper were continuing to dampen prospects of a return to strong output growth.

The firm hiked its average annual tender price inflation forecast for 2026 to 3%, up from 2.5% in the last quarter of 2025, which it said reflected persistent cost pressures rather than a sharp uplift in demand.

However, it said factors which had contributed to last year’s contraction - which saw total construction output fall 2.1% in the fourth quarter compared to quarter three - were beginning to ease.

Improvements on the cost of capital were beginning to stabilise sentiment and reduce risks to scheme viability at the beginning of this year, which the report described as an important shift following two years of heightened uncertainty.

“Overall, the message is not that order books are rebuilding yet, but that forward demand has shifted from sharp contraction to a more measured, sideways profile,” the report said.

The Bank of England held interest rates at 3.75% this month in a knife-edge vote, with four out of nine members of the bank’s Monetary Policy Committee favouring an immediate reduction.

The rate of inflation fell sharply in January to 3% from 3.4% in December, according to figures published by the Office for National Statistics this week, increasing the likelihood of an interest rate cut next month.