Glenigan, one of the construction industry’s leading
insight and intelligence experts, releases the July 2024 edition of its
Construction Review.
The Review focuses on the three months to
the end of June 2024, covering all major (>£100m) and underlying (<£100m)
projects, with all underlying figures seasonally adjusted.
It’s a report which provides a detailed
and comprehensive analysis of year-on-year construction data, giving built
environment professionals a unique insight into sector performance over the
last 12 months.
The latest results indicate strong
construction start performance during Q.2 2024, especially when compared to the
previous year’s data.
Photo: Old Oak Common, HS2 Ltd
Averaging £9,247 million per month, work
starting on site in the three months to the end of June decreased 13% against
the preceding three months, but grew by the same amount compared with last
year.
This boost was attributed to a massive
spike in major project-starts which rose dramatically, increasing 91% compared
to 2023. However, this impressive result was tempered by lacklustre performance
from underlying project-starts which dipped 2% during the three months to June
and 19% on the previous year.
Commenting on the figures, Glenigan’s
Economic Director, Allan Wilen says: “Project-starts are finally overtaking last year’s levels, a
sign that the industry is starting to move in the right direction, buoyed by a
substantial uptick in major projects. Despite being lower than Q.1, returning
socio-political stability will hopefully make for a strong Q.3 when it comes
time to make the comparison later in the year.”
Main contracts awards fell 34% against the
previous three-month period, and 32% against 2023 levels. Digging deeper, major
contract awards experienced a significant slump, standing 55% lower than Q.1
and 38% lower than the same time last year. Similarly, underlying contract
awards also fell, declining 16% against the preceding period and 30% compared
to 2023 levels.
It was a similar story for planning
approvals, down 19% against Q.1 and 21% on a year ago. Major planning approvals
fell 43% against the preceding period, with the value decreasing by 40% on last
year. Underlying planning approvals increased a modest 1% on the preceding
three months, but finished 7% lower than the same period in 2023.
Allan continues: “The downward trend in
approvals could signal a potential stalling in construction activity, to be
expected due to the impact of the recent General Election and the usual summer
slowdown. However, I’d expect a gradual easing in interest rates over H2 2024
and greater stability as the new Government settles in, to create renewed
industry confidence and an upturn in demand; good news for the industry!
Furthermore, the Chancellor’s commitment to reform the NPPF should create
opportunities for housebuilders over the rest of the year and into H1 2025.”
The sector-specific and regional index,
which measures underlying project performance, saw starts softening across the
board. However, there were some pockets of growth in the residential sector and
some verticals. A handful of regions also experienced an uptick in activity.
Taking a closer look at the highlights…
Residential
starts jump up on Q.1 performance
Residential construction performance was
mixed. Underlying work starting on site totalled £7,023, up 6% compared to the
preceding three months. However, it still dragged 27% behind 2023 levels.
Underlying contract awards in the sector
decreased 11% (when seasonally adjusted) against Q.1 2024, also decreasing 27%
against the previous year.
More positively, underlying planning
approvals increased 3% against the preceding three months. However, it failed
to increase on 2023, slipping back 8% against the same time last year.
Social housing performance was strong and
contributed to underlying growth, with starts doubling compared to the
preceding three months and 12% compared with the previous year.
Private housing dropped back, with
underlying work starting on site falling 5% against the previous three-month
period and plummeting 32% on 2023 levels.
Civil
engineering work grows on last year
Underlying civil engineering
project-starts fell 11% compared to the last quarter. However, starts were up
on last year, totalling £1,805 million.
Underlying contracts awards experienced a
weak performance, decreasing 31% against the preceding quarter to stand 42%
down on 2023 levels.
However, underlying approvals climbed 4%
(SA) on Q.1 and were 3% higher than a year ago.
Drilling deeper into this vertical,
infrastructure project-starts experienced an impressive growth period,
increasing by 12% against the previous three months and doubling its value
against the previous year. The commencement of the £31 million resurfacing of
various carriageways in Staffordshire significantly contributed to this boost.
Utility starts decreased 38% against the
preceding three months and also saw a decline against 2023, down 27%.
Regional
Analysis
The North East was the
strongest-performing region in the UK, with project-starts increasing 56%
against the preceding quarter, to stand 8% up on this time last year.
The outlook for the South West was also
optimistic, with starts up 20% on the preceding three months. However, it
declined 10% on the previous year.
Several other regions of the UK
experienced growth in project-starts against the previous quarter, including
the East Midlands (+16%) and the South West (+20%).
Elsewhere, performance was subdued. The
North West experienced a 15% decrease against the preceding three months and
remained 21% down compared to the previous year.
London experienced particularly poor
performance, with the value of project-starts falling 16% against the preceding
three months and by 33% compared with the same time last year.
Wales slipped back 17% on the preceding
three months to stand 48% below last year’s figures. This was the steepest
year-on-year decline of any region.
Work starting on site in the West Midlands
(-7%), Scotland (-15%), and Northern Ireland (-8%) remained behind 2023
figures.
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