Glenigan Index of construction starts to end of May 2024

Construction Performance Stabilises following protracted period of Decline

• Rate of decline continues to soften, with the value of underlying work starting on site falling 13% in the three months to May, finishing 16% lower than a year ago
• Hotel & Leisure starts increased 23% against 2023 figures, and rose 39% compared to the previous three months
• Education starts increased 35% against the preceding three months to stand 14% up on a year ago
• Social housing performance was up 1% during the Index period
• Overall, non-residential project starts posted comparatively modest performance dips compared to previous Indexes, falling a mere 9% on 2023 levels, down 6% against the preceding three months

Refreshingly, the June Index reveals that overall sector decline is gradually levelling out and that, whilst undoubtedly lower than 2023 figures, equilibrium is returning in line with a slowly stabilising economy. Similar to last month’s Index, hotel and leisure was in clover, experiencing another activity boost, whilst education starts also spiked. In the regions, Yorkshire & Humber and Northern Ireland stood out as the clear front-runners, up during the Index period and on the previous year.

Similar to May’s results, the rate of decline hovered in the early-to-mid teens. The value of underlying work starting on site during the three months to May decreased 13%, standing 16% lower than a year ago.

As Glenigan’s Economist, Drilon Baca, says, “Return to a period of relative stability will be welcomed across the sector. However, with a General Election exactly a month away, we need to approach these figures with an element of caution. Whatever the results it will have a considerable effect on industry behaviour, particularly in the private sector, either prompting a spurt of activity or a resumption of the pausing and delays commonplace over the past 24 months. In the public sphere, much will depend on the policies announced in respective manifestos and what the victorious party, or parties in a Hung Parliament, choose to prioritise.”

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

Sector Analysis – Residential

Residential construction starts were generally disappointing, decreasing 11% on the preceding three months and down 21% on 2023 figures.

Private housing performance fell 23% compared to the previous year, and 15% against the previous three months to May.

On the other hand, social housing, having consistently posted poor results, experienced a small reversal in fortunes, jumping 1% compared to the preceding three months. However, this little increase wasn’t enough to stop it from finishing 16% lower than 2023 levels.

Sector Analysis – Non-Residential

There were a handful of positive stats to draw on in non-residential verticals.

Hotel & leisure was the stand-out performer, rising 39% against the preceding three months and 23% up on the previous year.

Education also returned a strong set of results, with the value of starts increasing 14% on 2023 levels, up an impressive 35% on the previous three months.

It was a mixed bag for community and amenity starts which, despite decreasing 36% against the preceding three months, increased 39% on last year. Similarly, if less severely, retail starts dipped a modest 3% during the Index period, finishing a solid 37% higher than 2023 levels.

Industrial starts experienced a poor period, with the value of starts decreasing 29% during the three months to May, 56% down on a year ago.

Health starts also had a sluggish Index period, down 2% on 2023 levels, and 25% compared to the preceding three months. Likewise, office starts tumbled 18% against the previous three months and 14% on last year’s figures.

Whilst infrastructure recorded a 6% increase on 2023 levels, a 25% decrease in the three months to May meant it wasn’t enough to turn the tides on a particularly poor outing for Civils work, which plummeted 41% during the Index period to finish 9% down on last year. Especially lacklustre performance in utilities starts will have made a massive contribution to these figures, with starts down over the last three months slashed in half (-50%), and almost a third (-31%) lower than in 2023.

Regional Outlook

Yorkshire & the Humber took the top spot this month, with starts increasing an impressive 35% against the preceding three months, up 34% above the previous year.

Northern Ireland came in an admirable second place, with starts increasing 22% against the preceding three months to finish 5% up on the previous year.

Elsewhere, there were mixed blessings with the value of starts in the South West increasing 28% against the preceding three months, but declining 1% against the previous year.  Vice-versa, the North West decreased 5% against the preceding three months, finishing 1% up on the previous year.

Elsewhere performance was weak. London experienced a 30% decrease against the preceding three months and was 25% down against the previous year. The value of starts in the South East decreased 25% compared with the preceding three months and declined by 25% against the previous year. The West Midlands experienced a 5% decrease against the preceding three months to stand 7% down on the previous year.

Starts also fell consistently in the East of England, East Midlands, Scotland, and Wales in both the Index period and compared to 2023 levels.