Glenigan Index of construction starts to end of June 2022

Project-starts return to decline

• The value of underlying work starting on-site during Q2 2022 fell 5% against the preceding three months to stand 27% lower than a year ago.
• While residential project-starts increased 17% against the preceding three-month period, the value remained 21% down on the previous year.
• Non-residential construction-starts fell by more than a fifth (-22%) compared with Q1 and declined 29% against the previous year.
• Infrastructure project-starts performed particularly poorly in Q2, falling 27% against the preceding three months to stand 47% lower than a year ago.

Commenting on the latest numbers Rhys Gadsby, Senior Economist at Glenigan said: "Project-starts returned to decline in June as construction material inflation, currently riding at 25% year-on-year, continues to disrupt industry activity. While strong growth in private housing-starts may provide the industry with some positivity, declines among the civil engineering and non-residential sectors are largely holding back any form of recovery."

Sector analysis

Residential project-starts improved during Q2 with the value rising 17% against the preceding quarter. However, the value remained 21% down on the previous year. Private housing work starting on-site advanced strongly (+43%) compared with Q1 levels, buoyed potentially by developers initiating work ahead of new building regulations. Despite this, private housing work starting on-site fell 14% against the previous year. Social housing project-starts performed poorly having slipped back 42% against the preceding quarter and previous year.

Performance among the non-residential sectors was largely negative. Only retail achieved growth against the preceding quarter (+6%) despite project-starts still remaining 28% lower than a year ago. Community & amenity-starts fell 1% against the preceding quarter but increased 21% against the previous year.

While health construction-starts remained unchanged on the preceding quarter, the value fell by a quarter compared with a year ago. Industrial project-starts also fell by a quarter against the previous year, but also experienced the greatest fall (-36%) against the preceding quarter of any non-residential sector. Hotel & Leisure (-32%), Offices (-23%) and Education (-21%) also experienced strong declines during Q2 to stand 40%, 30% and 37% lower than a year ago respectively.

Civil engineering experienced a very poor period for project-starts with the value having experienced the greatest declines against both the preceding quarter (-27%) and previous year (-47%). Utilities suffered the weakest period, with project-starts falling 30% during Q2 to stand almost half (-48%) the value of the previous year. This was the strongest decline of any sector against the previous year. Similarly, infrastructure-starts fell by a quarter against the preceding quarter and 46% compared with a year ago.

Regional Outlook

Performance among UK regions was very mixed in Q2. On a positive note, the most-northern regions of England performed well with growth of 7% in the North East and 2% in the North West against the preceding quarter.

While project-starts were up 2% against the previous year in the North West, the value fell 2% in the North East. Northern Ireland also experienced a strong period, with growth of 3% against the preceding quarter and 44% compared with a year ago.

The South West (+11%) also experienced an increase during Q2 but project-starts remained a third lower than the previous year. Construction-starts in the East Midlands remained unchanged against the preceding quarter but experienced the greatest decline (-47%) against the previous year.

Two areas performed particularly poorly, one being London which experienced a 30% fall against the preceding three months to stand 45% lower than a year ago. The other was Yorkshire & the Humber, which suffered the heaviest decline against the preceding quarter (-32%) and a 43% fall against the previous year.