Glenigan Index of construction-starts to end of May 2021

Construction-starts rise as confidence returns

• The value of underlying construction work (under £100 million in value) commencing on-site during the three months to May 2021 was 69% higher than a year ago and 19% higher than the preceding three months on a seasonally adjusted basis. However, project-starts were still 9% lower than the same period in 2019.
• Residential project-starts experienced the greatest growth of 91% compared to a year ago but were still 5% lower than two years ago. Residential-starts also experienced the biggest increase against the preceding three months (29%).
• Non-residential work starting on-site was 80% higher than a year ago and 19% higher than the previous three-month period. However, non-residential project-starts were 12% lower than the same period in 2019.
• Underlying civil engineering-starts experienced the smallest growth of 2% against the previous year and was the only area to experience a decline compared with the preceding three-month period (-11%). Civil engineering project-starts were also 11% lower than they were two years ago.

Glenigan’s Economic Analyst, Rhys Gadsby, commented on the latest figures: “Unsurprisingly project-starts for the vast majority of sectors and regions achieved strong growth against the same period last year when the UK was in lockdown for the first time. However, as civil engineering project-starts remained strong throughout the first lockdown, YoY growth figures in this month's index will be relatively low compared to other sectors.

Project-starts in only four sectors and five regions were higher than they were two years ago, illustrating that further recovery is yet to come. However, the outlook is bright with main contract awards and detailed planning approvals both strong. High confidence is expected to lift starts during the second half of 2021, although the supply and cost of materials may dampen the pace of project-starts and work on-site.”

Sector Performance

The value of residential work commencing on-site during the three months to May was 91% higher than a year ago but remained 5% lower than the same period in 2019. Private housing was the strongest performer, with starts 122% up on a year ago and 31% higher than during the preceding three months (seasonally adjusted). Private housing-starts were also 1% higher than they were during the same period in 2019. While social housing project-starts were 39% higher than last year, they were still 18% lower than two years ago. Reassuringly, the value of social housing-starts climbed by a fifth compared to the preceding three months.

Non-residential project-starts increased 80% against the previous year and 19% compared to the preceding three-month period but remained 12% lower than during the same period in 2019. Retail project-starts performed very strongly having increased 190% compared to a year ago and 104% against the preceding three months. Retail project-starts also achieved the greatest growth compared to the same period in 2019 (40%). Health project-starts were also strong, despite slipping back 5% against the preceding three months, with the value of starts being 79% higher than a year ago and 8% higher than the same period in 2019.

Project-starts for all other non-residential sectors were lower than two years ago. Despite this, office-starts still performed strongly having increased 126% against the previous year and by a quarter compared to the preceding three months. Office-starts were only 2% lower than they were two years ago. Education-starts also improved, having risen 79% against the previous year and 6% compared to the preceding three months.

Overall, civil engineering starts during the three months to May were 2% higher than a year ago but 11% lower than the same period in 2019. Infrastructure starts climbed 27% against the preceding three months to stand 29% compared to a year ago and were 4% higher than during the same period in 2019. In contrast, utilities-starts were weak, dropping by 66% against the preceding three months to stand 56% lower than a year ago and 53% lower than during the same period in 2019.

Regional Performance

Project-starts in the South West performed strongly having climbed 91% against the previous year and 40% compared to the preceding three months on a seasonally adjusted basis. The region was also one of five regions to experience growth against the same period in 2019 with growth of 2%. Yorkshire & the Humber had the best three-month period with project-starts increasing by 44% against the preceding three months and standing 149% higher than a year ago. Project-starts in the region were also 66% up on the same period in 2019.

The East Midlands, with growth of 36% against the same period in 2019, also performed strongly. Underlying project-starts in the region were 68% higher than a year ago and 22% up on the preceding three months. London experienced 36% growth against the preceding three months and a rise of 109% year-on-year but were 15% lower than two years ago. Similarly, project-starts in the South East climbed 22% against the previous year but were still 33% down on the same period in 2019. The North East had a very poor period for project-starts with the value declining against both the previous year and the preceding three months.