Improved project starts and strong development pipeline signal brightening construction prospects
- Starts in the three months to March 5% up on the preceding quarter, although 13% lower than a year ago.
- Strong private sector development pipeline expected to boost tendering opportunities over the coming months.
Overall the value of work starting on site* in the three months to March was 13% down on the same period of a year ago, according to the latest Glenigan Index. However, this is an improvement on the performance in recent month and is evidence that industry workload is stabilising after the disruptions seen over the winter.
The rise in starts during the first quarter against the closing months of 2015 demonstrates the positive outlook for industry workload over the coming months.
The development pipeline is continuing to strengthen, with the value of work securing planning approval in the first quarter 9% up on a year of planned projects, driven by an increase in private sector schemes. The development pipeline of private housing, industrial and office projects are particularly strong.
Glenigan Index to March 2016
Private investor confidence will be key. Near term we anticipate that some private sector investors will defer their final commitment to proceed with planned projects until after June’s EU referendum. Nevertheless we anticipate that there will be a rise in projects going out to tender over the coming months as clients’ line up work to start in the second half of the year.
Accordingly while the impending vote is likely to dampen project starts in the near term, the second half of 2016 could see a sharp rise in activity as private investors press ahead with projects once the issue of EU memberships has been resolved.”
Many of those areas worst affected at the turn on the year by the flooding and water logged ground have seen the sharpest turnaround in project starts. The North West, West Midlands East of England and Scotland all saw a double digit growth in the value of projects starting on site during the first quarter.
Glenigan Indices (underlying* projects up to £100 million)
|
|
Glenigan Index |
Residential |
Non-residential |
Civil engineering |
||||
|---|---|---|---|---|---|---|---|---|
|
|
Index |
% Change |
Index |
% Change |
Index |
% Change |
Index |
% Change |
|
Mar-15 |
123.9 |
12% |
135.7 |
22% |
106.7 |
4% |
162.0 |
14% |
|
Apr-15 |
102.0 |
-10% |
110.4 |
3% |
89.5 |
-15% |
129.9 |
-25% |
|
May-15 |
99.8 |
-16% |
108.9 |
1% |
88.9 |
-16% |
118.6 |
-41% |
|
Jun-15 |
97.5 |
-23% |
97.7 |
-21% |
94.0 |
-17% |
112.1 |
-44% |
|
Jul-15 |
102.9 |
-20% |
103.4 |
-21% |
103.8 |
-10% |
97.4 |
-47% |
|
Aug-15 |
115.1 |
-15% |
121.0 |
-11% |
112.9 |
-12% |
107.0 |
-37% |
|
Sep-15 |
123.5 |
-7% |
136.0 |
5% |
114.8 |
-10% |
122.3 |
-24% |
|
Oct-15 |
130.5 |
1% |
143.6 |
11% |
121.4 |
0% |
129.7 |
-21% |
|
Nov-15 |
127.1 |
-1% |
133.3 |
-2% |
124.7 |
15% |
118.6 |
-37% |
|
Dec-15 |
101.9 |
-13% |
108.1 |
-16% |
100.1 |
8% |
90.9 |
-51% |
|
Jan-16 |
102.1 |
-20% |
110.7 |
-23% |
97.9 |
-3% |
94.2 |
-52% |
|
Feb-16 |
90.8 |
-24% |
99.0 |
-24% |
80.1 |
-20% |
111.4 |
-32% |
|
Mar-16 |
107.3 |
-13% |
110.3 |
-19% |
96.6 |
-9% |
143.7 |
-11% |
Note: *, underlying projects are valued over £250,000 and under £100 million
r – Revised, p – Provisional. Percentage change is against the same period of previous year.
Source: Glenigan
*Note on the statistics
The Glenigan Index of project starts provides a leading indicator of construction activity in the UK. It is based on data collected about every construction project which started on site during the previous three-month period. The Index covers civil engineering, office and commercial projects over £250,000 and more than 10 units for residential property. It excludes any project over £100 million.