Project starts remain weak in ‘protracted period of depression’

The three months to the end of January saw the value of construction project starts plummet by 36 per cent compared with the previous 12 months, Glenigan has revealed.

In its latest Construction Index update, the industry intelligence data provider added that the residential sector suffered a 34 per cent year-on-year drop while non-residential project starts dropped by 37 per cent. “This downhill trajectory is unsurprising given persistently high interest rates and intense economic uncertainty, keeping public and private investors cautious about committing to new projects,” it stated.

When comparing the latest November-January figures to October-December 2023, Glenigan found that residential starts fell by 16 per cent and non-residential starts decreased by 12 per cent.

While the retail and amenity sectors were bright spots in October-December, with year-on-year increases of 6 per cent and 28 per cent respectively, they each experienced a decline in the three months to January.

Retail project starts “slipped back abruptly” compared with the previous three months, Glenigan stated, with a 27 per cent year-on-year fall. Project starts in the amenity sector dropped by 11 per cent.

But these sectors still performed better than hotels and leisure (down 45 per cent on a year-on-year basis), utilities (41 per cent), offices and civils (39 per cent each), infrastructure (38 per cent) and education (37 per cent).

Regional results

Poor sector performance translated into lower regional results, with project starts weakening across most areas of the UK during the three months to January, Glenigan stated.

The South East suffered the worst decrease of 25 per cent compared with the previous three-month period and 54 per cent down year on year. In Scotland and Wales, the value of project starts plunged by 30 per cent against the previous three months, and in year-on-year terms, Scotland fell by 38 per cent and Wales by 50 per cent.

There was a mixed performance in the East Midlands, where project-start values grew by 42 per cent compared with October-December but dropped 30 per cent year on year.

Glenigan economics director Allan Wilen said the latest figures show “project-start performance remaining frustratingly slow across the sector, amid eye-watering economic conditions”.

He added: “This protracted period of depression is evident in sharp declines across the private residential, industrial and commercial sectors. On a more positive note, civil-engineering starts remain slightly more stable, posting a modest decline [4 per cent] against the preceding three months. However, they remain sharply lower than this time last year.”

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