Regional Outlook

The value of construction output in Great Britain, excluding routine repair and maintenance work, grew by 5% last year, according to official data released by ONS. Regionally, growth was broadly based, with sharp increases in output recorded in London, southern England and the Midlands. Wales also enjoyed strong growth with output 13% up on the previous year. In contrast, construction output was flat or falling across the north of England and in Scotland. The output data is based upon the value of work carried out on construction sites during 2016. This includes both new projects that started on site during the year and earlier projects that were still under construction during 2016. Glenigan project starts data tracks the value of new projects that started during the year and is a valuable indicator of future levels of construction activity as these projects are built out over time. Glenigan starts data points to a shifting regional pattern of construction during 2017.  Overall the value of underlying project starts slipped back 4% last year and starts are expected to remain subdued this year. This will dampen the national level of construction output during 2017. However this national picture masks marked regional variations in project starts that will shape construction activity across the country during the current year and beyond. Indeed Wales is the one part of the country where a rise in construction output in 2016 should be replicated during the current year thanks to sustained increases in project starts during 2016 and forecast for 2017. Elsewhere a shift in industry workload appears to be underway. Whilst project starts fell back across the north of England and Scotland during 2016, a recovery in underlying starts is forecast for the current year. In contrast a weakening in project starts is anticipated in London and the South East after a relatively firm performance in 2016. This shift in project starts will take time to feed through to construction output, however we anticipate that the forecast strengthening in project starts in northern England and Scotland should help to lift construction output during the second half of this year and during 2018.