Glenigan Index of Construction Starts to End of February 2021

Residential sector drives recovery in construction project-starts

• The value of underlying construction projects (under £100 million) commencing on-site during the three months to February was 3% higher than the previous year and 4% higher than the preceding three months on a seasonally adjusted basis.
• Residential work starting on-site was responsible for the growth, climbing 30% against the previous year and 17% compared to the preceding three-month period.
• Non-residential project-starts declined 18% compared to a year ago but climbed 1% against the previous three months.
• Underlying infrastructure work starting on-site struggled during the period, falling 19% against the previous year and 25% compared to the preceding three months.

Rhys Gadsby, Glenigan’s Economic Analyst, commented on the latest figures: “It is positive to see project-starts return to pre-lockdown levels, despite the current strict COVID-19 restrictions.

That construction-starts during the three months to February 2021 were higher than a year ago will also provide the industry with some degree of confidence, particularly as the previous year was before the commencement of the first national lockdown. The recovery to date has been in-line with our 2021 – 2022 forecasts and the construction industry is poised for further growth over the coming months as the UK’s vaccination programme helps to unlock the economy

Sector Performance

“The value of residential work commencing on-site during the three months to February was 30% higher than a year ago and 17% higher than the preceding three months on a seasonally adjusted basis. Private housing project-starts experienced particularly strong growth, rising 31% against the previous year and 29% compared to the preceding three months. Social housing work commencing on-site climbed 27% against the previous year but declined 11% compared to the preceding three months.”

“Non-residential work starting on-site declined 18% compared to the previous year but increased 1% against the preceding three months on a seasonally adjusted basis. Health project-starts climbed 38% against the previous year despite falling 38% against the preceding three months. In contrast, hotel & leisure work starting on-site climbed 38% compared to the preceding three months but declined 40% against the previous year. 

“Retail was the only non-residential sector to achieve growth against both the previous year (44%) and the preceding three months (27%). However, retail project-starts were particularly low a year ago. Industrial project-starts performed relatively poorly, declining 12% against the previous year and 3% compared to the preceding three months on a seasonally adjusted basis.”

“Civil engineering work starting on-site during the three months to February declined 19% against the previous year and by a quarter compared to the preceding three months (seasonally adjusted). Infrastructure project-starts were the main cause of the decline, being 26% lower than a year ago and 42% lower than the preceding three months. Utilities project-starts were 4% lower than the previous year but climbed 5% against the preceding three months on a seasonally adjusted basis.”

Regions

A few regions experienced relatively strong performances for project-starts during the three months to February. The North East witnessed the greatest growth against the previous year of 79% and experienced an increase of 18% compared to the preceding three months on a seasonally adjusted basis. The East of England also performed well and experienced increases of 10% against the previous year and the greatest rise against the preceding three months of 44%. 

Work commencing on-site in London climbed 17% against the previous year and by a quarter compared to the preceding three months. The North West was another region that saw project-starts increase, with rises during the period of 38% against the previous year and 19% against the preceding three months. 

In contrast, Scotland and Wales experienced steep declines of 17% and 37% against the previous year. Compared to the preceding three months, work commencing on-site in Scotland declined by a fifth while project-starts in Wales fell 36%. The West Midlands experienced falls of 23% against the previous year and 5% compared to the preceding three months on a seasonally adjusted basis.

ENDS