Construction performance analysis – Q2 2021

Project starts

The upturn in project starts seen in Q1 stalled during the second quarter, however looking ahead the sustained rise in main contract awards points to a renewed strengthening in project-starts during the second half of the year.

The value of projects starting on-site averaged £5,491 million per month during the second quarter; a 17% decline against the preceding three months but 54% higher than the lockdown disrupted period a year ago. The fall against the preceding three months was due to a 10% decline (seasonally adjusted) in the value of underlying projects-starts (under £100m).

Despite the decline, underlying starts were 49% up on the second quarter of last year, although they were 20% below pre-pandemic levels seen during the same period of 2019.

At an average of £1,773 million a month, major projects rose 14% against the preceding three months and were 66% higher than a year ago and 32% up on the same period in 2019.

Contract awards

The value of contract awards rose 12% against the first quarter of 2021 to stand 82% up on a year ago and 9% above the same period in 2019.

Major contract awards were little changed on the first three months and were more than double (120% up) on a year ago.

Underlying contract awards increased by 18% (seasonally adjusted) on the previous quarter to stand 72% higher than a year ago.

Planning approvals

After strong growth at the turn of the year, the value of work securing detailed planning consent slipped back during the three months to June. Approvals were 14% lower than during the first quarter and 9% down on a year ago. The decline was led by a fall in the value of major projects securing planning approval, which declined by 33% against the preceding three months and was 51% lower than a year ago.

In contrast the value of underlying (under £100m) detailed planning approvals edged higher, rising by 6% against the first quarter (seasonally adjusted) and 18% up on a year ago.

Construction activity

The volume of work carried out on-site slipped back 0.8% during May, according to the latest official data from ONS. The recent slowing in project starts and material supply issues may have contributed to the dip in output. However, earlier strong growth during March ensured that output during the three months to May was 6.3% up on the preceding three months. Output was also 39.7% up on a year ago, a period when many site operations were suspended or substantially disrupted during the first national lockdown.

• Repair and maintenance output grew by 5.8% during the three months to May and was 45.8% ahead of a year ago. Non-housing R&M was especially buoyant, rising by 9.0%
• New build output rose 6.6% and was 36.3% up on a year ago
• Private and social new housing output experienced strong growth, rising by 7.4% and 13.2% respectively
• Infrastructure has been the strongest performing new work sector, rising by 9.7% against the preceding three months
• Industrial sector activity edged 1.1% higher
• Commercial sector output grew by 4.2%
• New public non-residential output rose by 1.3%