Glenigan’s latest Construction Review has found that while project starts have fallen over recent months, there are signs of revival in the industry.
The February edition of the review by the insight and intelligence specialist saw that construct starts remained weak throughout the three months to January, as the UK continues to weather persistent economic downturn and negotiate a turbulent socio-political landscape. Project starts were down on both the preceding three-month period by 22% and the previous year by 31%.
However, there are some signs of potential revival, with main contracts awards up 18% against the preceding period, despite finishing 21% lower than the same time last year. By contrast, detailed planning approvals registered an increase of 18% against 2023 figures, yet fell 17% against the preceding three months.
Another positive was the value of major project contract awards, which increased by 136% compared with the preceding three months, an average of £3,589million per month.
Glenigan’s economic director, Allan Wilen, said: “Starts on-site have continued to soften in line with a hostile economic environment, exacerbating an already protracted activity downturn. However, an uplift in major contract awards should shine a light, hinting at brighter prospects in the not-too-distant future.”
“Improving confidence and interest rate expectations should provide a boost to retail sales after a poor performance in December, helping to lift consumer-related construction sectors over the coming months. Indeed, housing market conditions have stabilised in recent months. The rise in prices has been accompanied by an increase in mortgage approvals and should help lift private housing starts as the year progresses.”
Residential starts remained depressed, falling 16% during the index period to stand 34% lower than a year ago. Private housing was down 18% against the preceding three months, with starts 36% weaker than 2023 levels.
It was an equally grim outlook for social housing, where project start levels dropped by 9% compared to the preceding three months and by 28% against 2023 figures.
Non-residential performance was also weak. Particularly, industrial project starts which suffered an 11% fall during the three months to the end of January, with levels slashed almost in half (-45%) compared to last year. Offices fared poorly, with the value of project starts falling back 19% against the preceding three months and 39% against the previous year.
Regionally, project starts weakened across most areas of the UK during the three months to January, with the South East suffering the heaviest fall, declining by 25% during the three months to the end of January and 54% down on a year ago.
It was a similar story in Scotland, with the value of project starts decreasing 30% against the preceding three months and remaining significantly down (-38%) on the previous year.
The North East was a mixed bag, with the value of starts increasing 1% against the preceding three months but falling back 18% on the year before.
The East Midlands, on the other hand, experienced a 42% increase against the preceding three-month period, although starts in the region remained 30% behind last year’s figures.
