Construction clients leave cares behind

Author: ross sturley cimcig

The construction industry has returned to growth after six months of contraction, according to figures released by Glenigan.

The latest Glenigan Index shows that construction activity has returned to growth, with the value of projects starting on site higher than a year earlier for the first time since March. The underlying* value of new schemes breaking ground was 6% higher than a year earlier during the three months to the end of October. This rise was fuelled by growth across the industry: The housing, civil engineering and non-residential building sectors were all up on a year earlier.

The fastest rise was in residential building, where the value of starts was up 9% on a year earlier. Activity was boosted by a 19% rise in social housing starts, the strongest expansion since the start of 2014.

Non-residential starts as a whole were up 4% on a year earlier, as growth in private sector activity offset continued weakness across the public sector. Industrial, office, retail and hotel and leisure starts all registered growth. However the gains were tempered by a 7% decline in education starts and a plummet in the value of new health projects.

The civil engineering sector saw a 6% annual rise in starts, as growth in utilities work offset a contraction in the infrastructure sector. Utilities starts were buoyed by the start on site of the £90m rated Ray Estate Wind Farm at Kirkwhelpington, near Newcastle.

Commenting on this month’s figures, Allan Wilén, Glenigan’s Economics Director, said: “The last three months have seen the commercial and industrial sectors finally shaking off the worries of earlier this year.”

Though UK construction moved back into growth, five of the UK’s twelve devolved nations and English regions continued to register declining levels of new activity. London, Wales and Scotland last saw growth in March this year: South West England hasn’t recorded a rise in starts since May 2014.
According to Mr Wilén: “London has seen consistently weak levels of both project starts and planning approvals during 2015, after the rapid rates of expansion recorded during 2013 and 2014.”

He added: “As such, it is the English regions outside of the Capital that are leading growth, with the Midlands a particular hot spot.”

The West Midlands saw starts up 37% on a year earlier and the East Midlands by 28% during the three months to October. The North West also saw a strong 27% rise in starts, with more modest growth being recorded across the North East, Yorkshire and Humber and South East England.

Indications of coming activity are even stronger: Glenigan have recorded rising values of work achieving planning approval in 11 of the 12 constituent English regions and nations of the UK. Only the capital saw approvals down compared to a year earlier during 2015 so far.