Featured Sector: Health

Underlying value of construction projects starting on site. (Excludes individual projects of more than £100 million and framework agreements).

The ONS reports that new orders for health related construction remain weak. Having fallen by 36% in 2011, new orders during the first nine months of last year were little changed on a year earlier. Against this weak background, the official data recorded an 8% decline in output as a 17% drop in the value of public sector work was partially offset slightly by 4% rise in private sector output.

Recent Glenigan data paint a similar story for the year ahead. Whilst underlying project starts strengthened during the first half of the year, this was due a temporary boost as work started on a £80m PFI hospital project and a large private sector nursing home. The value of project starts subsequently weakened during final six months of 2012. Indeed the value of project starts during the final quarter of 2012 was 12% down on a year earlier. This left the value of project starts for the year as a whole 7% up on 2011.

The more recent Glenigan data has seen a marked a turnaround in project starts which increased by 21% during the three months to February against the same period a year ago. The sector was boosted in the period by new build starts from both the private and public medical sectors.

However recent data on planning approvals point to a less optimistic outlook; for the three months to January approvals were 28% below the level seen at the same time last year.

Our outlook for the sector remains subdued and we expect starts to fall below levels seen last year in the coming months.