Glenigan Index of construction starts to end of January 2024

Weak kick-off to 2024 as construction starts fall across the board

• Underlying project-starts experienced a downturn during the three months to January, declining 13% when seasonally adjusted
• The value of work starting on-site fell 36% compared to last year
• Residential construction starts decreased 16% on the preceding three months and dropped by over a third on 2023 figures
• Non-residential project-starts fell 12% against the preceding three-month period, down 37% on a year ago
• Civil engineering work starting on-site was down 4% compared with the preceding three months, and 39% down against the previous year

Overall, project-starts nose-dived compared to 2023 figures, plummeting 36%. This included residential construction which, having rallied in the previous edition of the Index, weakened 34% on the year before.

All other vertical performance was weak, with non-residential project-starts finishing 37% lower than the same period last year.

This downhill trajectory is unsurprising given persistently high interest rates and intense economic uncertainty, keeping public and private investors cautious about committing to new projects.

Commenting on the Index findings, Glenigan’s Economic Director, Allan Wilen says, “The February Index shows project-start performance remaining frustratingly slow across the sector, amid eye-watering economic conditions. This protracted period of depression is evident in sharp declines across the private residential, industrial, and commercial sectors. On a more positive note, civil engineering starts remain slightly more stable, posting a modest decline against the preceding three months. However, they remain sharply lower than this time last year.”

Taking a closer look at the sector verticals and regional outlook…

Sector Analysis – Residential

Residential construction starts decreased 16% on the preceding three-month period to stand 34% lower than a year ago.

Private housing similarly decreased 18% against the preceding three months, with starts 36% weaker than 2023 levels.

Social housing performed poorly on both counts, with work starting on-site falling 9% against the previous three months, standing 28% down on the previous year.

Sector Analysis – Non-Residential

The value of starts across non-residential sectors fell 12% during the three months to January, finishing 37% lower than 2023 figures. All verticals experienced a decline against last year.

Industrial project-start performance was especially poor, with project-starts weakening 11% during the three months to the end of January to stand 45% lower than a year ago. Offices also fared poorly, with the value of project-starts falling back 19% against the preceding three months and 39% against the previous year.

It was a similar story for education, which saw the value of underlying project-starts fall back 17% against the preceding three months to stand 37% down on a year ago.

Retail project-starts also slipped back abruptly, declining 18% against the preceding three months to stand 27% down on the year before.

Health and community & amenity also decreased 10% and 14% against the preceding three months, to stand 33% and 11% down on the previous year, respectively.

Hotel & leisure starts dropped by 45% compared with last year but increased a modest 3% on the preceding three-month period.

Civils work starting on-site dropped 4% against the preceding three months to stand 39% down on a year ago. Infrastructure starts dropped 38% on the previous year’s figures, despite increasing 3% on the preceding three months.

Civils general decline was also influenced by utilities activity, which declined 13% against the preceding three month-period, finishing 41% down on 2023.

Regional Analysis

Regional performance was poor, with project-starts weakening across most areas of the UK during the three months to January.

The South East suffered the heaviest fall, declining 25% during the three months to the end of January to stand 54% down on a year ago.

It was a similar story in the Scotland, with the value of project-starts decreasing 30% against the preceding three months and remaining significantly down (-38%) on the previous year.

Project-starts in Wales experienced a sharp fall against both the preceding three months (-30%) and previous year (-50%).

The North East was a mixed bag, with the value of starts increasing 1% against the preceding three months but falling back 18% on the year before.

The East Midlands, on the other hand, experienced a 42% increase against the preceding three-month period, although starts in the region remained 30% behind last year’s figures.

Northern Ireland and the West Midlands weakened against the preceding three months, falling back 9% and 12%, respectively. Both regions were down on the previous year, remaining 33% and 16% lower than a year ago.

This was also the case in Yorkshire & the Humber and the North West, which both crashed compared to both the preceding three months and the previous year.