Glenigan Index of Construction Starts to End of January 2021

The Glenigan Index shows construction project-starts remain low as national lockdown continues

• The value of underlying construction projects (under £100 million) commencing on-site during the three months to January were 21% lower than the previous year and 19% lower than the preceding three months on a seasonally adjusted basis.
• Residential project-starts fell 11% compared to a year ago and 15% against the preceding three-month period.
• Non-residential project-starts experienced the greatest decline, falling by a third compared to the previous year and 21% against the preceding three months.
• Infrastructure project-starts also declined 21% compared to the preceding three months, but only declined 5% against the previous year.

Rhys Gadsby, Glenigan’s Economic Analyst, commented on the latest Glenigan Index figures: “The value of projects commencing on-site during the three months to January was particularly low. Only three sectors achieved growth against the previous year and only one region avoided a decline.

A nation-wide lockdown commencing in late-December and the threat of a no-deal Brexit during November and December are likely to have affected projects moving to site over the past three months. Equally, severe weather across the UK in January would have also played a part towards the end of the period. With the national lockdown commencing in December, project-starts are likely to remain low next month.”

Sector Performance

“The value of residential project-starts during the three months to January fell 11% against the previous year and 15% compared to the preceding three months on a seasonally adjusted basis. The decline was largely influenced 12% decline in private housing project-starts against the previous year, although social housing work starting on-site also declined by 7%. Social housing project-starts experienced a particularly sharp fall of 35% against the preceding three months, whereas private housing work commencing on-site fell 6%.”

“Non-residential project-starts declined 34% compared to the previous year and 21% against the preceding three months (seasonally adjusted). Most non-residential sectors experienced steep declines, including the hotel & leisure and office sectors which witnessed declines of 61% and 45% against the previous year. Office project-starts declined by a third compared to the preceding three months while hotel & leisure work starting on-site climbed 8%. Education project-starts also experienced a particularly poor period, falling 42% against the previous year and 8% compared to the preceding three months.

In contrast, two sectors experienced relatively good periods during the three months to January. Despite project-starts falling 45% compared to the preceding three-month period, health work commencing on-site increased 49% against the previous year. This was the greatest growth against the previous year of any sector. Interestingly, retail project-starts also performed strongly, rising 25% compared to a year ago and 5% against the preceding three months. However, this was compared to two very weak periods for the sector.”

“Civil engineering work commencing on-site during the three months to January declined 5% compared to a year ago and 21% against the preceding three months on a seasonally adjusted basis. Infrastructure project-starts were the main cause of the decline, being 20% lower than a year ago and 38% lower than the preceding three months. In contrast, utilities project-starts performed well, climbing 40% against the previous year and 10% compared to the preceding three months. This was the sharpest growth against the preceding three-month period of all sectors.”

Regions

“The value of project-starts in the North West during the three months to January climbed 15% against the previous year and 1% compared to the preceding three months on a seasonally adjusted basis. The North West was the only region to achieve growth against the previous year.

Project-starts in Wales experienced significant declines, falling 64% against the previous year and 42% compared to the preceding three months. Similarly, work commencing on-site in Scotland decreased 35% against the previous year and 46% against the preceding three months. Work commencing on-site in London declined 23% compared to a year ago and by a fifth compared to the preceding three-month period.

Besides the North West, the East of England and West Midlands were the only other regions to experience growth in the value of project-starts against the preceding three months, with increases of 5% and 34% respectively. Compared to a year ago, project-starts in the East of England declined 17% whereas in the West Midlands they fell 5%.

ENDS