House building still leading the way

• Glenigan Index for May up 10% year on year, driven by strong growth in private housing, hotel & leisure and utilities sectors. 
• Private housing remains the main driving force behind UK construction growth, with project starts up by 21%.
• Hotel & leisure the strongest of the non-residential sectors, up 31% on 2013.
• Further growth in civil engineering shows that opportunities are improving across the industry, with the underlying value of starts up by 21%.

House building remains the main driving force behind UK construction growth, with private housing activity rising for the 13th consecutive month, according to the latest figures from industry analysts Glenigan.

The Glenigan Index for May, which covers the value of projects starting on site during the previous three months, is 10% higher than a year ago – powered by robust growth in the private housing, hotel & leisure and utilities sectors.

Private residential activity increased by 21% from the same period in 2013 – confirming its position as the key driver of growth in the Glenigan Index.

Forecasts of private non-residential construction remain positive, but the rate of expansion has moderated compared to the strong growth seen at the end of 2013. The hotel & leisure sector has seen the strongest improvement relative to a year ago, recording a 31% rise in project starts. The trend of growth in office construction has also continued, with the value of starts up by 14%, while industrial activity is 8% higher than a year ago.

Commenting on this month’s figures, Allan Wilén, Economics Director at Glenigan, said: “Private house builders are continuing to open new sites in response to the improving housing market conditions and we anticipate further expansion following the extension of the government’s Help to Buy scheme out to 2020.”

“In addition to this, early signs of real wage growth should encourage retail and leisure operators to press ahead with new developments.”

Elsewhere in this month’s Glenigan Index, the retail sector saw a 2% drop compared to last year, however Glenigan data suggests that this stall in growth is temporary and the drivers of the sector remain strong.

Further growth in civil engineering shows that opportunities are improving across the industry, with the underlying value of starts up by 21%.

“Roads and rail investment was stepped up during 2013 and announcements by the government and Network Rail suggest that relatively high levels will be sustained to the end of the current Parliament and beyond,” Wilén said.

“However we anticipate work to stabilise somewhat in 2014, with the pace of growth easing from the 13% rate seen last year.”

The utilities sector recorded a 47% rise and work in the sector looks set for further growth, with increased investment into renewable energy in particular.

Meanwhile, a 17% increase in new education developments was sufficient to offset falls in the weaker public sector areas of health and community & amenity.

The picture of growth remains positive across much of the UK, with rising activity across the southern English regions, Wales and Scotland.

The strength of civil engineering work in the East of England, particularly relating to energy, has helped fuel strong growth in the region over the last three months. The underlying value of starts was 70% higher than a year ago, with £214 million of underlying civil engineering projects breaking ground - up from £91 million in the same period of 2013.

Northern England looks largely positive, with starts up in the North West, although activity has fallen in Yorkshire and the Humber. Starts in the East and West Midlands also fell back slightly compared to a year ago.

Northern Ireland has seen very strong growth in recent months, but from a low base following the protracted downturn. Workloads in the region may now begin to stabilise, with the value of starts dipping in the latest three month period.

The monthly Glenigan Index is based on extensive research of every construction project starting in the UK over the previous three-month period, providing an indicator of developing activity and future output in the industry.

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