Update on the existing ins article

Following astonishing falls, project starts show tentative signs of recovery

– Overall construction work commencing on-site was 46% lower than the previous year and 22% lower than the preceding three months on a seasonally adjusted basis during the three months to July.

– Residential starts during the three months to July declined 44% on the previous year and 21% against the previous three months (seasonally adjusted). 

– Non residential work starting on-site experienced the sharpest decline during the three months to July, falling 48% on a year ago and 22% on the preceding three months (seasonally adjusted). 

– Civil engineering project starts were 44% down on the previous year down by a quarter on the preceding three months on a seasonally adjusted basis.

Rhys Gadsby, Glenigan’s Economic Analyst, commented on this month’s figures: “The value of new projects commencing on-site is still sharply down on the previous year. The latest Glenigan Index shows a 45% fall in the value of starts during the three months to June against a year ago. This decline was largely due to the lockdown impacting starts in May. However, when looking at June alone, the value of starts began to recover. The value of work commencing on-site in June was just 15% lower than the previous year, a very welcome improvement on May’s performance.

Nevertheless, we are starting to see a recovery, albeit gradual. The value of work starting on-site in July alone was 49% higher than the low-point seen during the lockdown in May, remaining unchanged on June. With lockdown restrictions having eased further at the start of July, this may encourage more contractors to increase capacity on-site and may also encourage more work in the development pipeline to proceed to site.”

Project-starts fall sharply across all sectors

“The value of residential work commencing on-site fell sharply during the three months to July against the previous year, with many major housebuilders shutting sites during the beginning of the period.

Social housing project-starts fell the sharpest within the residential sector during the three months to July, falling 48% against the previous year and 39% compared to the preceding three months on a seasonally adjusted basis.

Private housing work commencing on-site also suffered during the three months to July, falling by 43% compared to a year ago and 12% compared to the preceding three months on a seasonally adjusted basis.”

“Non-Residential work commencing on-site continued to struggle during the three months to July. The value of starts during the three months to July declined 48% compared to the previous year and 22% on the preceding three months (seasonally adjusted). All non-residential sectors saw a decline in the value of starts against the previous year.

Office starts fell particularly sharply during the three months to July, dropping by 58% against the previous year and by a quarter compared to the previous three months on a seasonally adjusted basis.

The value of hotel & leisure and education work commencing on-site both experienced steep declines during the three months to July, standing at half the level of a year ago. Against the preceding three months (seasonally adjusted), hotel & leisure starts declined 42%, whereas education starts remained largely unchanged.

The value of retail starts declined 36% against the previous year, although they were 34% up on the preceding three months on a seasonally adjusted basis. Retail was the only sector to grow against the preceding three months.

Against the previous year, health experienced the smallest drop in the value of starts against the previous year, falling 20%. Against the preceding three months (seasonally adjusted), health projects commencing on-site dropped 28%.”

“The value of civil engineering starts during the three months to July were 44% lower than a year ago and 25% lower than the preceding three months (seasonally adjusted).

Infrastructure starts were down 44% compared to the previous year and were 12% down on the preceding three months on a seasonally adjusted basis.

The value of work commencing on-site within the utilities sector during the three months to July was 43% lower than the previous year and 44% lower than the previous three months.”

Starts decline in every region

“With many sites shutting during the three months to July, it is unsurprising that starts in every region across the UK suffered heavily.

The sharpest fall was experienced in Scotland, where the value of starts was 60% lower compared to the previous year. Scotland imposed tight restrictions on construction sites during the lockdown period and were slower to lift those restrictions compared to the rest of the UK.

The East of England was another region that experienced a steep decline in the value of starts during the three months to July. Compared to the previous year, the value of starts declined 57%.

Starts also fell steeply in the North East and Yorkshire & the Humber, with both areas seeing the value of starts fall 55% compared to a year ago.

Wales fared the best out of any area of the UK during the three months to July, although here too the value of work commencing on-site declined by 22% against a year ago

Glenigan Indices (underlying* projects up to £100 million)