Glenigan Construction Review
- Overall value of project starts during the three months to October declined 29% against preceding 3 months
- Main contracts awarded rose by 4% in value against the previous three months, up 32% on a year ago
- Planning consents edged 2% higher against the preceding three months in 2021
- Underlying civil engineering work starts fell 32% compared with the previous three months to October 2021, 43% down on 2020
- Underlying industrial project starts increase 41% against the preceding three months in 2021, also standing 38% higher than a year earlier
- London was the strongest performing part of the country for underlying projects, with starts rising 2% during the three months to October 2021
Today Glenigan, the construction industry’s leading insight and intelligence experts, release the November edition of its Construction Review.
This monthly report provides a detailed, comprehensive analysis of construction data, giving built environment and property professionals a unique insight into sector results, from the three months to the end of October 2021.
A significant takeaway from November’s figures is, whilst the decline in project starts continues to affect the sector, an uptick in approvals and contract awards demonstrates a degree of resilience.
Failure to Launch
Against the context of global skills shortages and persistent supply chain issues, inevitably the overall value of project starts during the three months to October declined.
This represented a 29% drop overall against the preceding three months to October 2021 and was 17% lower than the same period last year.
A softening in underlying work (< £100 million) (16%) and a sharp decline in major projects (> £100 million) down a massive 50% on the preceding three months this year supports the wider acknowledgement of a temporary autumn slump, following a summer of intense activity.
Reasons for Optimism
Supporting Glenigan’s predictions this downturn in project starts is a short-term challenge, an increase in detailed planning approvals and main contract awards highlights a healthy pipeline of future work in 2022 and beyond.
This emphasises the predictions found in Glenigan’s most recent industry Forecast (November 2021) which predicts sector-wide growth next year, despite the current disruption battles.
Analysing the data further, the value of main contracts awarded rose by 4% against the previous three months and was 32% up on a year ago.
Major contract awards rallied, following relatively poor performance between July – September. Although still lower compared to the three months to July (-8%), awards were up 20% compared to 2020.
Planning consents edged 2% higher against the preceding three months but were unchanged on a year ago. Nevertheless, approvals were 17% above the same period in 2019.
On-site activity remains stable
According to the latest official ONS data, the value of work carried out on-site picked up in September, having weakened in the previous two months. Again, external, global events had a major role to play. Likely, the recent energy and fuel crises will have only exacerbated the situation. This slight increase was not enough to prevent a 1.5% slip against the preceding three months, but was up 9.7% on 2020.
Looking to the sector split, residential new work fell back during the period coverage in this Review, with private and social housing falling by 3.5%.
Public non-residential and commercial output also declined, dropping by 12.8% and 5% respectively against the preceding three months.
Sector Focus
A general decline in underlying starts persisted across almost all sector verticals.
Underlying civil engineering work starts saw a fall of almost a third (-32%) compared with the previous three months to October, and were 43% down on a year earlier. This was highlighted through poor underlying infrastructure performance, 42% lower than a year ago. Utilities were also 45% lower.
Residential, retail, hotel & leisure, health and education also witnessed a decline in performance in the three months to October. For underlying residential, it was also 22% down on the same period last year.
Standing out from the crowd, underlying industrial project starts proved a pillar of strength, increasing 41% against the preceding three months as well as standing 38% higher than a year earlier.
Underlying office starts were also high, climbing 8% against the preceding three-month period to October, 23% higher than a year ago.
Likely these spikes are caused by a significant increase in ‘mission critical’ projects coming online and an even greater push from employers to get staff back into the formal workplace.
Regional Performance
London was the strongest performing part of the country for underlying project-starts, with starts rising 2% during the three months to October to stand 28% up on a year ago. Similar to previous reviews, the North West was the only other region to see an increase in underlying starts against the preceding three months (+3%) with starts also up 9% on a year ago.
Underlying starts continued to fall across the rest of the nation, with Wales performing particularly poorly, with value plummeting 51% against the preceding three months to stand 74% down on a year ago.
Commenting on the findings, Glenigan’s Economic Director, Allan Wilen says, “Tough times continue as disruptive global events continue to hit hard, however a gradual increase in contract awards and planning consents indicate momentum will soon start to revive.
“Of course, ready availability of personnel and material when shovels need to go into the ground will determine how long the slump in starts persists.
“Once again, there’s massive regional inconsistency, with only two parts of the country seeing an increase in activity. This will no doubt become a priority for the new LUHC Secretary, who will need to strike a balance across the nation to deliver on the government’s much trailed levelling-up agenda.”
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