Latest News Tue, Mar 22, 2016 5:37 PM
Construction growth eased in the three months to August, pegged back by declining social housing work, according to the latest figures from industry analysts Glenigan.
The Glenigan Index, which covers the value of projects starting on site from May to July, is 10% higher than a year ago – easing from 15% recorded last month largely due to a slowdown in new residential work.
The underlying value of residential starts recorded its lowest rise since April 2013, up just 4% compared to a year ago. However underneath this headline figure is a divergence between the private and social housing sectors. Private housing starts rose by 16% on a year ago, maintaining the same pace of growth seen so far this year. By contrast, social housing starts fell 11% on a year earlier.GleniganIndex_Aug-14
Glenigan data suggests this relative dip will not knock the industry out of the steady groove it has found in 2014.
Allan Wilén, Economics Director at Glenigan, said: “Readings from the last six months have shown the underlying value of project starts expanding at rates around 12% each month. This is below the breakneck rises of 20% and 28% seen in the third and fourth quarters of last year but nonetheless represents a very healthy level of expansion.
“The flow of main contract awards shows plenty more work waiting in the wings. In total, £26.4 billion of work was secured in the first half of 2014, a 17% rise on a year earlier, with contractors strengthening their order books across the whole range of industry sectors.
“The only sector seeing a drop was social housing, suggesting further declines ahead.”
Elsewhere in this month’s Index, road, rail and renewable energy investment continues to drive growth in the value of underlying civil engineering starts, with the sector recording a 23% rise on a year earlier.
Expansion has been more modest at the higher end of the value scale, however a steady flow of large schemes continue to support overall workloads. Among the major schemes that started in the last three months and are excluded from Glenigan’s underlying figures is the Mersey Gateway Bridge, linking Runcorn and Widnes in the North West of England, and the Brigg renewable energy plant in North Lincolnshire.
Growth in private non-residential work continues to outpace the public sectors, however development in the more consumer-facing areas of retail and hotel and leisure has been muted over the last three months.
Hotel and leisure starts were up 2% on a year ago, while retail saw a mild 1% drop. This compares with impressive rises of more than 40% in the value of office and industrial starts.
The monthly Glenigan Index is based on extensive research of every construction project starting in the UK over the previous three-month period, providing an indicator of developing activity and future output in the industry.
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