Recovery underway – Glenigan Report

Whilst still being down on pre-pandemic levels, the last three months have seen a marked improvement in construction starts

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• The value of work starting on-site rose by 22% during the three months to August on a seasonally adjusted basis, although starts were still 32% lower than a year ago.
• Residential starts during the three months to August were 34% lower than a year ago, but climbed 21% against the preceding three months (seasonally adjusted). 
• Non-residential work commencing on-site declined by a third against the previous year. However, against the preceding three months (seasonally adjusted), starts climbed 29% during the three months to August.
• Despite a fall of 21% against the previous year, civil engineering starts during the three months to August increased by 9% against the previous three months on a seasonally adjusted basis.

Rhys Gadsby, Glenigan’s Economic Analyst, commented on this month’s figures: “Whilst still being down on pre-pandemic levels, the last three months have seen a marked improvement in construction starts. For example, the value of work starting on-site in August was almost double that of the low-point seen during the lockdown period. Encouragingly, the vast majority of sectors experienced an increase in the value of starts during the three months to August against the preceding three months.

However, the industry still has some-way to go, with the value of work starting on-site still sharply down on a year ago. The latest Glenigan Index shows a 32% fall in the value of starts during the three months to August against the previous year. With lockdown restrictions eased, we anticipate the value of starts to increase over the coming months.

Project-starts recover against lockdown lows

“With many housebuilders still having sites shut at the beginning of the three months to August, the value of residential work was still sharply down against the previous year. However, against the preceding three months (seasonally adjusted), the value of residential work starting on-site increased by 21%.

Private housing project-starts bounced-back the fastest within the sector, with the value of work rising 28% on the preceding three months (seasonally adjusted), although starts were still 38% lower than a year ago.

Social housing starts also increased on the preceding three months (seasonally adjusted), rising by 7%, but were 24% down on the previous year.”

“Despite the value of non-residential work being 33% lower than the previous year, against the previous three months (seasonally adjusted), the value of non-residential starts climbed 29%.

The health sector experienced the biggest increase in the value of starts, increasing by 86% against the preceding three months (seasonally adjusted) and was the only sector to be up on a year ago.

Office starts during the three months to August also experienced a relatively large increase in the value of work commencing on-site against the preceding three months (seasonally adjusted), rising by 45%. Despite this, starts during the period were still 28% lower than a year ago.

Retail starts also increased convincingly against the preceding three months (seasonally adjusted), climbing 41%. However, the value of retail-starts were 37% down on the previous year.

The hotel & leisure sector struggled during the three months to August, falling by 58% on the previous year and by 24% on the preceding three months (seasonally adjusted). The sector was the only non-residential sector to experience a fall against the preceding three months.”

“The value of civil engineering starts during the three months to August increased by 9% against the preceding three months, on a seasonally adjusted basis, although starts were still 21% down on a year earlier. The rise was driven by a 42% rise in utilities starts against the preceding three months (seasonally adjusted). In contrast infrastructure starts fell by 7% against the preceding three months and were 19% lower than a year ago.

Gradual recovery among UK regions

For most parts of the UK, the value of starts during the three months to August were still down on a year ago.

The sharpest falls occurred in Scotland and Yorkshire & the Humber, with both experiencing falls of 50%. The value of starts in the North East, London and Wales were 46%, 45% and 42% lower than a year ago respectively.

The South West was the only region to experience a rise against the previous year, with the value of starts climbing 32%.

Against the preceding three months (seasonally adjusted), many regions experienced an initial recovery in the value of starts.

Northern Ireland and the South West experienced particularly strong recoveries in starts against the preceding three months (seasonally adjusted), with the value of work commencing on-site increasing 149% and 97% respectively.

The East of England and Scotland also experienced strong increases in the value of starts against the previous three months, with the value of starts rising 57% and 55% on a seasonally adjusted basis respectively.

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