Quiet start to 2020 for construction sectors

A GLENIGAN REPORT

• Starts in the three months to January were 11% down on the previous three months (seasonally adjusted) and 9% lower than a year ago.
• Residential starts were 22% down on the preceding three months and 21% lower than a year ago.
• Non-Residential projects slipped 3% against the preceding three months and were 1% down on a year ago, with growth in education office and community & amenity work offsetting weakness in other areas.
• Civil engineering starts rose 2% on the preceding three months, but 22% lower than a year ago.

The value of work starting on site during the three months to January fell 11% against the previous three months on a seasonally adjusted basis and was 9% down on a year earlier, according to the latest Glenigan Index.

Commenting on this month’s figures, Rhys Gadsby, Glenigan’s Economic Analyst, said: “The latest Glenigan Index reveals a subdued start to the New Year for construction. The value of underlying project starts dropped 11% during the three months to January. Political uncertainty and delay ahead of the general election contributed to the fall. The more certain political environment should now enable postponed public-sector projects to proceed to site and will hopefully lift investor confidence over the coming months.

“Private Residential starts weakened further during the three months to January. Private housing starts fell by 12% against the preceding three months on a seasonally adjusted basis and were 18% down on a year ago. Social housing starts dramatically slipped back, falling by 46% against the previous three months and were 45% down on a year ago.”

“Overall non-residential projects slipped 3% against the preceding three months on a seasonally adjusted basis and were 1% lower than a year ago. Offices, education and community & amenity grew by 12%, 7% and 30% respectively against a year ago. Growth in these areas was largely offset by weakness in other non-residential sectors. Health starts slipped back during the last three months, falling by 31% on a seasonally adjusted basis, and decreasing by 21% against a year ago.

Retail and hotel & leisure starts were 19% and 10% lower respectively than a year ago.

“Civil engineering starts edged 2% higher against the previous three months on a seasonally adjusted basis but were significantly down on a year ago (22%). Utilities work rose by 6% against the preceding three months on a seasonally adjusted basis but was 27% lower than a year ago.

Most regions saw a decline in starts on a year ago. The North West, North East and the South West saw the sharpest declines, with the value of underlying starts falling by 52%, 51% and 29% respectively. There were also double-digit declines in starts in the East & West Midlands, and Yorkshire & the Humber. However, London, Wales and Northern Ireland were bright spots, with starts increasing by 14%, 63% and 27% respectively against the same period a year ago.

A full copy of the Glenigan forecast is available upon request. Please direct any enquires to rhys.gadsby@glenigan.com