Glenigan Index of construction starts to end of February 2024

Civil engineering offers a rare bright spot despite gloomy construction outlook

• The value of underlying work starting on-site during the three months to February fell 9% against the preceding three-month period to stand 24% lower than a year ago.
• Residential construction-starts slipped back 16% on the preceding three months and a by a fifth (19%) against the previous year.
• Non-residential project-starts fell by 7% against the preceding three months, dropping by nearly a third (30%) on a year ago.
• Civil engineering work starting on-site increased 19% against the preceding three months, down 21% against the previous year.

Similar to the January and February Indexes, the March edition shows construction starts softening across the board. As Q.1 2024 rounds off, performance continues to be lukewarm amid price inflation and investor uncertainty. This is evidenced by a 9% drop in starts against the preceding three months as well as a 24% decline against 2023 figures.

However, the sector was buoyed by improved prospects in a number of verticals, including civil engineering which enjoyed growth during the Index period, up by nearly a fifth (19%) on the preceding three months.

Commenting on the results, Glenigan’s Economic Director, Allan Wilen, says, “Many will be disappointed to see the decline in projects starting on site, but given the current economic situation it’s hardly surprising.

“Nevertheless, a few bright spots are emerging out of the gloom. A marked rise in infrastructure starts has lifted civil engineering starts during the last three months. Similarly, health project-starts are on the rise, while an increase in office projects has helped support a 22% rise in starts in London.”

Taking a closer look at the sector verticals and regional outlook…

Sector Analysis – Residential

Residential construction experienced overall decline in the three months to February as starts fell 16% to stand 19% lower than a year ago.

Social housing performance was particularly weak, down by nearly a third (31%) against the preceding three months and 30% compared with the previous year. Private housing also dropped back, with work starting on site falling 11% against the previous three-month period and plummeting 17% on 2023 levels.

Sector Analysis – Non-Residential

The value of starts across non-residential sectors fell 7% during the three months to February, finishing 30% lower than 2023 levels.

Overall performance was weak, with health the only vertical to make headway on both the preceding three months and the previous year, advancing by a quarter (25%) to stand 19% up on 2023. Civils work also increased against the preceding three months, up 19%. However, these figures failed to increase against the year before.

Civils growth was boosted by infrastructure activity, with starts increasing by nearly a third (31%) against the preceding three months but remaining down by a fifth (22%) on a year ago. Utilities starts increased 3% against the preceding three-month period but were 18% down on the previous year.

Industrial project-start performance was dismal, suffering a 38% fall during the three months to February to stand 48% lower than a year ago. Retail also fared poorly, with the value of project-starts falling back 22% against the preceding three months and nearly a quarter (23%) against the previous year.

Offices experienced a mixed period, with the value of underlying project-starts increasing 18% against the preceding three months but standing 30% down on last year.

Community & Amenity followed a similar trend, advancing 21% against the preceding three-month period but falling back 6% on 2023 levels.

Education project-starts slipped back, declining 18% against the preceding three months to stand a sharp 39% down on the year before.

Hotel & Leisure fell down a modest 3% against the preceding three months, remaining 39% behind 2023 levels.

Regional Analysis

Regional performance was poor, with most of the UK experiencing a weakening in project-starts during the three months to February.

However, London also offered bright spots, with project-starts performing relatively well compared to the rest of the UK, increasing 22% against the preceding three months. Despite this, starts failed to match 2023 levels, remaining 15% behind.

It was a similar story in the West Midlands, with the value of project-starts increasing 15% against the preceding three months but remaining 8% down on the previous year.

Scotland experienced a similar trend, advancing 2% against the preceding three months but falling back by a quarter (25%) on the year before.

Northern Ireland and the North East weakened against the preceding three months, falling back 4% and 31%, respectively. Both regions were down on the previous year, remaining 16% and 43% lower than a year ago.

Some areas of the UK fared even worse, including Wales where the value of project-starts fell 37% against the preceding three months to stand a whopping 57% down on a year ago. This was also the case in Yorkshire & the Humber which crashed compared to the preceding three months and the previous year.