Glenigan Index of construction-starts to end of June 2021

Project-starts slow following first quarter spike

• The value of underlying project-starts (under £100 million in value) dropped 10% during the second quarter of 2021. Whilst being 49% higher than a year ago, project-starts were 18% lower than during the second quarter of 2019.
• While residential work starting on-site experienced the sharpest increase against the previous year of 79%, project-starts fell 20% against the preceding quarter and were 16% lower than two years ago.
• Non-residential project-starts climbed 4% against the preceding quarter to stand 39% up on a year ago. However, against the same period in 2019 project-starts declined 21%.
• Underlying civil engineering-starts increased 6% against the previous year but fell 13% against the preceding quarter and by a fifth compared with the same period in 2019.

Rhys Gadsby, Glenigan’s Economic Analyst, commented on the latest figures: “Positively, project-starts remain substantially up on the lockdown-affected previous year, with only two sectors and one region not experiencing growth. However, project-starts have slipped back after the first quarter surge in activity and remain below pre-pandemic levels across the majority of sectors and regions.”

“With project-starts performing so strongly in the first quarter, largely due to pent-up demand, a slowdown in project-starts was largely expected. In addition, material supply problems may also be delaying the start of some projects. However, detailed planning approvals and main contract awards remain high, pointing to a strong pipeline of projects. A further strengthening in starts and an easing of material supply delays is anticipated over the coming months.”

Sector Performance

“The value of residential project-starts during the second quarter of 2021 was 79% higher than a year ago but remained 16% lower than the same period in 2019. Private housing work starting on-site declined 27% compared with the preceding quarter (seasonally adjusted) but was 86% up on a year ago. However, private housing-starts declined 17% compared with the second quarter of 2019. Social housing project-starts climbed 5% against the preceding three months to stand 68% higher than a year ago but were still 13% lower than the same period in 2019.”

“Non-residential work starting on-site increased 39% against the previous year and 4% against the preceding quarter (seasonally adjusted), although they remained 21% lower than two years ago. Retail was the best performing sector; project-starts increased by 61% against the preceding quarter and were 186% up on a year ago and 41% higher than two years ago. Office project-starts increased 87% against the previous year and by a third compared with the preceding quarter but stood 9% lower than the second quarter of 2019.”

Health was the only other sector within non-residential to experience growth against the same period in 2019, with project-starts having increased by a tenth. Health work commencing on-site was 6% higher than a year ago despite slipping back by a quarter compared to the preceding quarter. Industrial-starts were 33% up on the previous year but were 30% lower than two years ago and 21% down on the preceding quarter. Hotel & leisure project-starts continued to perform poorly, declining 4% against the previous year and 3% compared with the preceding quarter to stand 48% lower than during the same period in 2019.”

“Underlying civil engineering work starting on-site during the first quarter of 2021 was 6% higher than a year ago but 19% lower than the same period in 2019 and 13% lower than the preceding quarter on a seasonally adjusted basis. Utilities project-starts performed well with the value climbing 25% against the previous year and by a third against the preceding quarter to stand 5% up on the same period in 2019. In contrast, infrastructure-starts fell 2% against the previous year and 27% compared with the preceding three months. Compared with the second quarter of 2021 infrastructure-starts fell 28%.”

Regional Performance

“Every region, other than the North East, during the first quarter of 2021 experienced growth against the previous year but only two achieved an increase compared with the same period in 2019. Despite remaining unchanged on the preceding quarter (seasonally adjusted), project-starts in Yorkshire & the Humber climbed 135% against the previous year to stand 42% higher than two years ago. The South West was the other region to achieve growth compared with two years ago with the value of project-starts having climbed 6%. Work starting on-site in the region also increased 83% against the previous year and 2% compared with the preceding quarter.”

“Project-starts in the Capital increased 79% against the previous year and 8% against the preceding three months but remained 22% lower than the same period in 2019. London and the South West were the only two regions to experience growth against the preceding quarter. Northern Ireland and the North West experienced the steepest declines compared with the same period in 2019 with the values having fallen 48% and 39% respectively.”