Glenigan Index of construction starts to end of August 2021

Decline in project-starts continues to slow

• The value of underlying work starting on-site declined against the preceding three months, on a seasonally adjusted (SA) basis, but at a slower rate than in recent months, suggesting that we are nearing the end of the decline.
• Residential project-starts declined 24% against the preceding three months (SA) and 23% compared with the same period in 2019. Despite this, the value remained 26% up on a year ago.
• Non-residential work commencing on-site increased 4% against a year ago but fell 23% against the preceding three months (SA). The value also fell 22% against the same period in 2019.
• Civil engineering project-starts fell 28% against the preceding three months (SA) as well as 38% compared with two years ago. Despite this, the value still increased 6% against a year ago.

Rhys Gadsby, Glenigan’s Economic Analyst, commented on the latest figures. “Project-starts have consistently declined across most regions and sectors over the last five months. While a decline was anticipated following the initial surge in starts during the first quarter, materials and labour issues have also contributed to the recent fall.

“Crucially, project-starts largely remained up on the previous year across the sectors and regions. Furthermore, while the value still declined in August, the decline in project-starts is slowing, suggesting that we are nearing the end of the decline. Rising business confidence as well as a very high level of main contract awards should help reverse the trend heading into the final months of the year.

Sector Performance

“The value of residential work starting on-site during the three months to September increased 26% against last year. However, the value declined 23% compared with the same period in 2019 as well as 24% against the preceding three-month period (SA). Social housing performed relatively well, with project-starts having increased 8% against the preceding three months (SA) and 18% compared with the previous year. Social housing-starts fell 9% against the same period in 2019, although this was a relatively small decline compared with other sectors. Private housing work starting on-site climbed 29% against the previous year. However, the value fell 28% against the same period in 2019 as well as by a third compared with the preceding three months (SA).”

“Non-residential project-starts climbed 4% against the previous year but declined by 22% compared with the same period in 2019 as well as by 23% against the preceding three months (SA). Health was the stand-out non-residential sector during the period, with the value of project-starts having increased 9% against the preceding three months (SA) to stand 3% up on the previous year. In addition, health starts were 89% higher than during the same period in 2019. Retail project-starts also performed well, having increased 55% against the previous year and 15% compared with the same period in 2019. However, the value fell 30% compared with the preceding three-month period (SA).

“While hotel & leisure project-starts climbed 52% against the previous year, the value fell 16% against the same period in 2019. More positively, other than social housing and health, hotel & leisure was the only other sector to achieve growth against the preceding three months on a seasonally adjusted basis (9%). In contrast, office starts performed poorly having fallen 24% against the previous year and 44% compared with the preceding three-month period (SA) to stand 41% below 2019 levels. Education and community & amenity were the only other non-residential sectors to experience declines against the previous year.

“Civil engineering project-starts climbed 6% against the previous year but experienced a 28% fall compared with the same period in 2019 and against the preceding three months (SA). Infrastructure project-starts performed very poorly, falling by 48% against the preceding three-month period (SA) to stand 22% lower than a year ago and 49% below 2019 levels. Arguably, this was one of the worst performances of any sector during the three months to September. In contrast, utilities project-starts climbed 81% against the previous year and 25% compared with the preceding three months (SA). However, utilities-starts still fell 18% against the same period in 2019.

Regional Performance

“While the majority of regions experienced growth in project-starts against the previous year, all witnessed declines compared with the same period in 2019. Project-starts in the North West performed very well, with growth of 39% against the previous year and 27% compared with the preceding three months (SA). The region was the only to experience growth against the preceding three months and was the best-performing region against the previous year. Project-starts in the region remained 9% behind 2019 levels. The North East also performed well against the previous year with growth of 30%, however the value fell 38% against the preceding three months (SA) and by a third compared with the same period in 2019.

“The East of England, West Midlands and Yorkshire & the Humber experienced strong increases against the previous year but declines against both the preceding three months and two years ago. While the two most-northern regions of England performed relatively well, the South East and South West performed poorly with declines of 3% and 1% against the previous year respectively. Project-starts fell by a quarter against the preceding three months (SA) in both regions. While the value remained 31% below 2019 levels in the South East, project-starts were only 6% down on the same period in 2019 in the South West.”