Featured Sector: Industrial

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

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The British industrial sector has undergone a period of significant decline, following the worldwide recession of 2008. UK manufacturing endured six consecutive quarters of declining output from the second quarter of 2008, with the trend finally being reversed in the last quarter of 2009.

This meant that while other primarily privately funded sectors saw an increase in construction over 2010 and 2011, new work remained far below the high seen a few years. Thought the underlying value of project starts last year was 12% up on 2010, it was still 47% lower than 2007.

We have seen a recovery in the conditions faced by manufacturing firms over the last couple of years. Consumer confidence has returned as the economy recovered faster than expected over 2010, while the weak sterling meant that demand from overseas boosted order books. While overseas orders have now dropped back, in part due to the continuing Eurozone crisis, domestic demand has improved. In addition, industries such as car manufacturing have shown there are still gains to be made in this depressed world economy.

Manufacturing saw its slow growth over 2011 halted in the final quarter, according to the ONS. In a recent GDP estimate, output in the sector fell by 0.7% over the fourth quarter of the year. This came after three consecutive quarters of growth and a positive 2010.

However, business conditions in general are improving and we expect firms to invest more in construction. The value of detailed planning approvals in the industrial sector has been increasing over the last six months, and Glenigan expects significant growth in project starts over 2012.