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The Glenigan Index: March 2017

  • Starts in the three months to March were 2% higher than a year ago.
  • Non-residential project starts were 7% ahead of the same period in 2016, supported by a stabilisation in hotel & Leisure starts and increases in private housing, industrial, retail, health and community & amenity work. 
  • Residential starts were 1% higher on a year ago as a rise in private housing starts offset subdued social housing sector activity. 
  • Civil engineering starts were 17% lower than a year ago.
Glenigan Index March 2017
A strong rise in project starts in March has offset earlier weakness and lifted the index for the first quarter of 2017 to stand 2% up on a year ago. On a seasonally adjusted basis, starts were also 2% up on final three months of 2016. The increase is partly due to a bounce back in civils projects in March.  In addition there have been encouraging increases in industrial, hotel & leisure, and health project starts.
Private residential starts for the three months to March were 6% higher than a year ago and 3% up on the previous quarter on a seasonally adjusted basis. This renewed strengthening in starts is encouraging and should help sustain sector activity during the current year.  Looking further ahead higher inflation is set to squeeze household spending and to dampen activity in the wider housing market. Against this weaker market background we anticipate a softening in private housing project starts during the second half of 2017.
Non-residential projects during the first quarter were 7% up on a year ago and 10% up on the previous three months on a seasonally adjusted basis. The recovery in non-residential starts has been driven by increases in industrial, hotel & leisure and health projects starts. The 27% rise in project starts is especially positive and suggests that investors’ are now pressing ahead with projects that were initially reviewed after the EU referendum vote. 
There has also been a market improvement in civil engineering project starts during March, with an increase in both infrastructure and utilities work. Unfortunately the increases were insufficient to fully offset weak project starts during January and February. Civil engineering starts during the first quarter were 17% down on a year ago and remained a drag on construction starts as a whole.
At a regional level, the South East, North East and East of England together with Wales enjoyed double digit growth, with project starts during the first quarter being 27%, 19%, 14% and 13% up respectively on a year earlier. There was also renewed growth in the Capital, while the value of starts in the North West of England also improved. The value of project starts slipped back elsewhere; at 20% the West Midlands saw the sharpest drop in project starts during the quarter.
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