The latest Glenigan Construction Review has found that project starts are up in the last quarter- but are down 37% on last year
Construction starts are up in the last three months, according to Glenigan, with major growth in office, residential, and civil engineering projects. But the industry continues to stumble, as starts are down 37% on last year’s figures.
Glenigan’s review covers all major (>£100m) and underlying (<£100m) projects, with all underlying figures seasonally adjusted.
The report showed mixed results across the sector
Work commencing on-site grew by 10% against the preceding three months but still stood 37% lower than a year ago.
Main contract awards faltered as well, declining by a fifth in the three months to May to stand 37% lower than the same time last year.
By contrast, detailed planning approvals advanced on 2022 levels, increasing 9%, but fell back on the preceding quarter (-14%).
Construction starts were not so promising in regional analysis
The East of England was the only region to show growth on the three months preceding May, with project-starts increasing 19%, but remaining 39% behind figures from the same time last year.
Wales suffered the most significant drop in project starts, declining 56% against the preceding three months to stand 43% down on a year ago.
Scotland was also down on both the preceding three months (-12%) and the previous year (-43%).
London and the South West both weakened against the preceding three months, falling back 1% and 12%, respectively. Both regions were down on the previous year, remaining 20% and 46% lower than a year ago.
The North East experienced falls of a quarter against both last year and the previous three months. Yorkshire and the Humber’s decreased was more severe, with a 31% decrease against the preceding three months and remaining significantly down (-52%) on the previous year.
Northern Ireland, the East Midlands, West Midlands, South East and the North West all crashed compared to both the preceding three months and previous year.
Residential starts performed equally poorly
Social housing project starts had the relatively best performance with the least dramatic decline of only 4% since February and 1% on last year.
Residential starts-on-site fell back 10% and were 46% lower than a year ago.
Private housing was down 13% against the preceding three-month period, with starts slashed in half (-55%) compared to 2022.
Civils, utilities and retail all floundered
Civils was down by half on last year’s figures- influenced by a marked decline in infrastructure starts, which dropped by 26% against the preceding three months to remain a staggering 56% down on the previous year.
Once again, civils performance slipped back, this time 30% lower than the preceding three months to stand 50% down on a year ago. This poor score was influenced by a marked decline
Utilities starts also declined by 35% against the preceding three months to stand 37% down against the previous year.
The value of Education project-starts declined 18% against the preceding three months, yet stood 9% up on 2022.
Community and Amenity starts matched Health’s decrease by half on last year. The bounceback displayed by Health starts in Q1 was nonexistent, dropping 20%.
Industrial was the only sector to experience growth during the Review period, with project-starts increasing 9% during the three months to May but falling back 20% compared with the previous year.
Unusual circumstances have driven construction start figures to extremes
Glenigan’s economic director, Allan Wilen commented, “It’s unsurprising construction starts are continuing to decline compared to 2022 activity, which enjoyed an artificial boost as developers rushed to move building works to site ahead of tighter regulations coming into force. Here and now, there’s an unpleasant combination of economic stagnation, strangled supply chains, and double-digit inflation.
“The predicted, eye-watering interest rate increases will also have a deleterious effect, keeping construction on the back foot, especially in the private residential market which will suffer from soaring mortgage rates.
“Nevertheless, there’s a glimmer of light at the end of the tunnel”
“A modest lift in project-starts in the three months to the end of May, as well as planning approval increases, suggest a pipeline slowly filling with upcoming work, likely to buoy the industry in the longer term.
“Looking at sector verticals in more depth, whilst the overall picture was disappointing, a lift in industrial starts following a weak first quarter is encouraging, with the rising demand for logistics space expected to drive sector activity over the next few months.”
You can read the Glenigan Construction Review for June 2023 in full here.
