Glenigan Index of construction starts to end of June 2024

Construction starts still down, but the decline slows

• The value of underlying project-starts dropped 19% compared to 2023, but only fell back 2% on the preceding three-month period
• Underlying residential starts were up 6% on the preceding three months
• Non-residential project-starts fell back by almost 10% on the preceding three months, also down 15% on a year ago
• Civil engineering performed well, with starts up 12% compared with 2023 levels

Similar to June’s results, the July Index shows that overall sector decline is gradually levelling out, with starts down a modest 2% on the preceding quarter when seasonally adjusted.

However, the value of underlying work starting on-site decreased 19% compared to a year ago.

Residential starts experienced a minor activity boost, whilst civil engineering starts also spiked.

As Glenigan’s Economist, Drilon Baca, says, “Pockets of growth provided a welcome boost to the sector following a slow front half of 2024.

“The election had a considerable effect on industry behaviour, resulting in a project-start slowdown as firms took a ‘wait and see’ approach. This tempered sector verticals, including residential construction, although it still managed to achieve modest growth on the previous quarter.

“Looking forward, the new Government’s decision to rapidly consult on reforms to the National Planning Policy Framework has unlocked opportunities for the built environment. The re-introduction of mandatory housing targets should help to ease the backlog of major housing sites, providing a boost to the industry, through a knock-on effect that will see other verticals benefit through more work.

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

Sector Analysis – Residential

Residential construction performance was mixed. The sector experienced a small reversal in fortunes during the Index period, jumping 6% compared to the preceding three months. However, it still dragged 27% behind 2023 levels.

Social housing performance was strong and contributed to this growth, with starts doubling compared to the preceding three months and 12% compared with the previous year.

Private housing also dropped back, with work starting on site falling 5% against the previous three-month period and plummeting 32% on 2023 levels.

This points to a consensus amongst Britain’s housebuilding industry to put recovery on hold, as construction firms delayed projects ahead of the general election in early July.

Sector Analysis – Non-Residential

Performance was mixed for non-residential verticals.

Retail was the only vertical to experience growth against both periods, increasing by 8% against the preceding quarter to stand 21% up on a year ago. Industrial starts decreased 30% against last year but saw a modest increase against the preceding three months, up by 3%.

Similarly, Hotel & Leisure construction-starts were also down 26% against 2023 figures, but rose 7% against the previous quarter.

Conversely, education starts experienced a fall of 7% against the preceding three months, but advanced 10% on the same period last year.

Civils work performance was inconsistent, up 12% on a year ago but down 11% compared with the last quarter. Drilling deeper into this vertical, infrastructure project-starts experienced an impressive growth period, increasing by 12% against the previous three months and doubling its value against the previous year. The commencement of the £31 million resurfacing of various carriageways in Staffordshire significantly contributed to this boost.

Utility starts decreased 38% against the preceding three months and also saw a decline against 2023, down 27%.

Elsewhere the sector continued to slump. Office starts remained lower than 2023 levels, decreasing 25%, and falling 4% during the three months to the end of June.

Health project-starts were in decline over the Index period, with a fall of 32% during Q.2. There was also a decrease of 19% against the previous year.

Community & Amenity works fared particularly poorly, with the value of project-starts declining 42% against the preceding three months, to stand 10% lower than a year ago.

Regional Analysis

The North East was the strongest-performing region in the UK, with project-starts increasing 56% against the preceding quarter, to stand 8% up on this time last year.

The outlook for the South West was also optimistic, with starts up 20% on the preceding three months. However, it declined 10% on the previous year.

Several other regions of the UK experienced growth in project-starts against the previous quarter, including the East Midlands (+16%) and the South West (+20%).

Elsewhere, performance was subdued. The North West experienced a 15% decrease against the preceding three months and remained 21% down against the previous year.

London experienced particularly poor performance, with the value of project-starts falling 16% against the preceding three months and by 33% compared with the same time last year.

Wales slipped back 17% on the preceding three months to stand 48% below last year’s figures. This was the steepest year-on-year decline of any region.

Work starting on site in the West Midlands (-7%), Scotland (-15%), and Northern Ireland (-8%) remained behind 2023 figures.