Glenigan Index: Construction back in decline

• The Glenigan Index of construction project starts falls 4%, reversing growth seen during the first quarter
• Residential construction flat as fall in social housing project starts cancels impact of growth in private housing project starts
• Yorkshire & the Humber and the East of England were the worst hit regions seeing year on year falls of 30% in construction project starts

Review

The underlying value of construction projects starting on site in the three months to April fell 4% year on year according to new data from Glenigan. "This is the largest year on year decline in the Index since the 5% fall in May 2011" said James Abraham, economist, Glenigan. 

Residential construction was flat year on year for the three month to April. "The 15% increase in private housing project starts was met by a 17% decline in social housing activity as private sector growth failed to outpace public sector cuts" commented Abraham. 

Abraham continued "There was a similar pattern of private sector growth versus public sector cuts in non-residential construction. Office and industrial building is responding to a shortage in supply following three years of limited building and supermarket investment remains high. However, the health, education and community & amenity all fell, as public sector cuts continue to bite."

Glenigan Index

Forecast

According to the latest Glenigan Index forecast the underlying value of construction projects starting on site will remain below that seen in quarter one of this year into 2014.

"The recent pattern of activity is expected to continue throughout 2012. Investment in infrastructure and private sector building recovery will be offset as Government cuts restrict health, education and social housing projects. Less money for new builds could see an increase in refurbishment work this year" said Abraham.

Abraham concluded "More growth is predicted for the commercial sectors, though a sustained rise depends on general economic prospects. The increase in private housing building seen over the first third of the year will slow over the next six months."

Glenigan Index Forecast

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Rolling three month index of project starts. Excludes projects worth £100m or more. For index values, 2006 = 100.
Source: Glenigan
P-provisional; R-revised.

The next Glenigan Index will be published on 31st May 2012 for 1st June 2012 release.