Glenigan economist on ONS construction industry statistics for Q3

Glenigan welcomes today’s announcement from the Office for National Statistics (ONS) that output in the construction industry in the third quarter of this year was 4.1% higher than during the third quarter of 2012. 

This second consecutive quarter of growth adds further strength to the belief that the construction industry is staging a recovery and corroborates the improving business sentiment Glenigan has seen over the last quarter.

A particularly encouraging development is the 7% rise in private commercial activity from Q2 to Q3. This reflects the improving sentiment in the private sector which is increasing investment. Glenigan has seen a rise in speculative developments during the last quarter as rental yields and take up of commercial property have increased. As public spending budgets are forecast to remain squeezed until the next general election, the private sector will be key to lifting work volumes.

The ONS reported a 5.1% decline of infrastructure output during Q3 this year compared to Q3 2012. This follows the fall Glenigan tracked with infrastructure projects starting on site last year. The sector has since rebounded; during Q3 the underlying value of starts on site of infrastructure projects rose by 30% on a year ago. Infrastructure has been a strong driver of growth in starts so far this year and healthy future workloads are expected in the sector.

Private housing output has risen strongly over the last two quarters, with the level of activity the highest since mid-2008. This strength in sector work reflects the impact of the first phase of Help to Buy, which was welcomed by house builders who have reported rises in new home reservations. Increasing house prices and high levels of mortgage approvals will continue to boost demand and private housing is set to be a key driver of growth through the final quarter of this year and into 2014.

The construction industry’s prospects are looking increasingly promising, in line with improving wider economic conditions. The fourth quarter so far has seen activity increase further, with the Glenigan Index of project starts reporting a 6% rise in the underlying value of projects starting on site in October - a strong lead indicator of the current market.

Glenigan data indicates that the value of projects receiving detailed planning approval during the three months to October was 30% higher than the same three months a year ago. A steady increase of approvals through 2013 means a strong pipeline of work is now in place for continued growth over the final months of the year and through 2014. 

For further information, please contact:
Kirsty Maclagan (Marketing and Communications Manager)
D: +44 (0)1202 786842 M: 0782 542 0321
E: kirsty.maclagan@glenigan-old.thrv.uk

Tom Crane (Economist)
T: +44 (0)20 7715 6297 M: 0776 965 6353
E: tom.crane@glenigan-old.thrv.uk