Glenigan Index of Construction-Starts to End of April 2021

Construction-starts rise as confidence returns

• The value of underlying construction work (under £100 million in value) starting on-site during the three months to April 2021 was 30% higher than a year ago and 18% higher than the preceding three months on a seasonally adjusted basis.
• Residential-starts experienced the greatest growth of 35% against the previous year as well as 14% growth compared to the preceding three months.
• Non-residential work commencing on-site climbed by a third compared to a year ago and by a quarter against the preceding three months.
• Underlying civil engineering project-starts increased 10% against the previous year and 6% compared to the preceding three months.

Rhys Gadsby, Glenigan’s Economic Analyst, commented on the latest figures: “Most sectors achieved strong growth during the three months to April. This is unsurprising considering that part of the period the latest figures are being compared to was during the first national lockdown which included many site closures. Compared to the three months to April 2019, underlying-starts were still 12% lower.

However, it is clear that a recovery is fully underway. Underlying project-starts during the three months to April were 18% higher than the preceding three months (seasonally adjusted), with most sectors and regions experiencing growth. Confidence in the construction industry is particularly high, with many contractors announcing strong order books for 2021 and 2022. We expect this to be a contributing factor to continued growth in project-starts heading into the summer.”

Sector Performance

“The value of residential work commencing on-site during the three months to April was 35% higher than a year ago and 14% higher than the preceding three months on a seasonally adjusted basis. However, residential-starts were still 11% lower than they were two years ago. Private housing project-starts performed very strongly and climbed 61% against the previous year and 21% compared to the preceding three months. In contrast, social housing project-starts performed poorly and declined 11% against the previous year and 5% compared to the preceding three months. While private housing work starting on-site was 5% lower than two years ago, social housing project-starts were 26% lower.”

“Non-residential project-starts climbed 33% against the previous year and 25% against the preceding three months on a seasonally adjusted basis. Despite this, non-residential construction-starts were still 15% lower compared to the three months to April 2019. Industrial-starts achieved the greatest growth of any sector, with project-starts having increased 85% against the previous year and 68% compared to the preceding three months. Industrial-starts were 16% higher than they were two years ago.

Health work starting on-site was 14% higher than the previous year, despite being 9% lower than the preceding three months. Health-starts were still 14% lower than they were during the three months to April 2019. Office construction-starts, which were still 13% lower than two years ago, climbed 61% against the previous year and 45% compared to the preceding three months. Hotel & leisure project-starts declined by a third compared to the previous year but did increase 14% against the preceding three months. Hotel & leisure project-starts were 51% lower than they were two years ago, this was the greatest decline of any sector.”

“Civil engineering work starting on-site during the three months to April was 10% higher than a year ago and 6% up on the preceding three months (seasonally adjusted). Growth was purely due to infrastructure project-starts which increased 50% against the previous year and 68% compared to the preceding three months. Infrastructure-starts were 3% higher than the same period two years ago. In contrast, utilities project-starts declined 52% against the previous year, 62% against the preceding three months and remained 43% lower than two years ago. Overall civil engineering project-starts remained 9% lower than over the same period two years ago.”

Regional Performance

“Project-starts in the South West during the three months to April performed very well, climbing 62% against the previous year and 54% compared to the preceding three months (seasonally adjusted). Project-starts in the region were 11% higher than they were two years ago. The East Midlands was another region which experienced a strong period, with project-starts having increased 59% against the previous year and 43% against the preceding three months. Work starting on-site in the East Midlands was 9% higher than two years ago.

Scotland experienced growth of 62% against the preceding three months as well as the greatest growth of 95% against the previous year. Project-starts in Scotland were 26% higher than two years ago. London experienced 45% growth in the value of project-starts against the previous year and 44% compared to the preceding three months, however construction-starts remained 7% lower than two years ago. Three regions witnessed a decline in project-starts compared to the three months to April 2020, including the South East where project-starts fell 5%.”