PLANNING
Work entering the system is a rough indicator of client confidence and contractors and suppliers do not have to be too concerned going on Glenigan’s data for early planning in June. Nearly £7 billion-worth of work was recorded at this stage. The 12-month rolling total went up for a fourth month in a row. The average amount of building work entering the system is 31 per cent higher than this time last year and major projects keeping appearing with outline planning applications submitted for a proposed £300 million mixed development in Sheffield and a £450 million project at Cardigan Street in Birmingham known as Eastside Locks. The 12-month rolling total for the plans approved stage did slip back slightly and this stage looks less healthy with the £775 million worth of work receiving the green light in June the lowest since April 2007 according to Glenigan.


TENDERS
Building work put up for grabs surged to £2.4 billion for a second time this year during June and helped produce a surprising rise in Glenigan’s 12-month rolling total. Optimism across the industry remains subdued according to the Chartered Institute of Purchasing & Supply but Glenigan’s data shows that large amounts of work is still being tendered with a view to starting on site in the coming months despite the state of the economy. The average value of work put out to tender in the 12 months to June 2008 is actually 11 per cent ahead of the total for this time last year. Input prices have certainly soared in that time but not by 11 per cent and, while there has been a slowing in recent months, this suggests that work is not disappearing quite as quickly as some bearish observers suggest.

MAIN CONTRACT
Glenigan recorded just over £3 billion worth of building orders placed in June and the 12-month rolling total edged up marginally. Although there was a fall in average spending in the commercial and medical sectors, there was a, perhaps surprising, increase in all four other sources of work: residential, industrial, education and leisure. Some of these rises were also very small though and there is little doubt that the industry is slowing down as Office of National Statistics (ONS) orders figures make clear. Overall construction orders – building and civil combined – retreated two per cent in the year to April 2006 according to the ONS but there was a rise of one per cent in the quarter to April on the preceding three months.

INDUSTRIAL
The sector received a surprising boost in June, when the orders totaled passed the £200 million mark for the second time in three months – and only the second time this year - according to Glenigan. With £203 million worth of industrial orders placed, the 12-month rolling total edged up. This may just be a spike as Savills’ development activity index shows that the industrial and warehouse sector is the fourth hardest hit of the nine sectors monitored in the research with activity still contracting heavily. More historically, Office of National Statistics (ONS) figures for the year to April 2008 show an 18 per cent drop against the same period a year ago, although the quarter to April was only down two per cent on the previous three months.

Back to News and Analysis