Glenigan Index of Construction-Starts to End of March 2021

Construction-starts surpass pre-lockdown levels

• The value of underlying construction work (under £100 million) commencing on-site during the first quarter of 2021 was 5% higher than the previous year and 2% higher than the preceding quarter on a seasonally adjusted basis. 
• Residential project-starts experienced spectacular growth having climbed 17% against both the previous year and preceding quarter.
• In contrast, non-residential work starting on-site declined 2% compared to a year ago and the previous quarter.
• Underlying civil engineering project-starts experienced the weakest period, having declined 12% against the previous year and 30% compared to the preceding quarter.

Rhys Gadsby, Glenigan’s Economic Analyst, commented on the latest figures: “Project starts have grown strongly despite the UK being in national lockdown for the majority of the first quarter. Starts are at their highest level since September 2019. Private housing experienced a particularly strong period and was the main driver for overall growth, although industrial, offices and retail also achieved strong growth. 

“Looking ahead the construction industry and its clients should have greater confidence to move more projects to-site during the second quarter as lockdown measures are progressively eased.

Sector Performance

“The value of residential work starting on-site during the first quarter of 2021 was 17% higher than a year ago and the preceding quarter on a seasonally adjusted basis. Private housing project-starts performed strongly and climbed 29% against the previous year and 24% against the preceding quarter. In contrast, social housing work starting on-site declined 9% against the previous year and 2% compared to the preceding three months.”

“Non-residential project-starts declined 2% against both the previous year and the preceding quarter on a seasonally adjusted basis. Education work starting on-site experienced a particularly poor period, having declined 28% against the previous year and 27% compared to the previous quarter. Hotel & leisure project-starts, despite being 16% higher than the previous quarter, were 40% lower than a year ago.

“However, a number of sectors performed strongly. Industrial work commencing on-site climbed 27% against the previous year and 23% against the preceding quarter. Office project-starts also achieved consistent growth, having climbed 8% compared to a year ago and 4% against the previous three months. Retail experienced the greatest increase of 90% against the previous year and 60% compared to the preceding quarter. However, retail project-starts were particularly low during both previous periods.”

“Civil engineering work commencing on-site during the first quarter of 2021 declined 12% against the previous year and 30% compared to the preceding quarter on a seasonally adjusted basis. Utilities project-starts experienced the greatest declines of 15% against the previous year and 54% compared to the preceding quarter. Infrastructure work starting on-site fell 11% compared to a year ago and 12% against the preceding quarter.”

Regional Performance

“The two most-northern regions of England experienced a good first quarter of 2021. The value of work commencing on-site in the North East climbed 51% against the previous year and 8% compared to the preceding quarter (seasonally adjusted). The region achieved the greatest growth against the previous year. The North West achieved growth of 26% compared to a year ago and 14% against the preceding three months. 

“Project-starts also performed strongly in London and the South West, having climbed 8% and 28% against the previous year respectively. London achieved growth of 18% compared to the preceding quarter whereas the South West experienced growth of 16%. Work starting on-site in Scotland climbed 4% against the previous year and 25% compared to the preceding three-month period.

“In contrast, the South East performed poorly with project-starts having declined by 26% compared to a year ago and 11% against the preceding quarter. The East of England, where project-starts fell 4% against the previous year and by a tenth compared to the preceding quarter, was another region to experience declines.”