The Glenigan Index, which covers the value of projects starting on site from January to March, is 15% higher than a year ago – propelled by double digit growth across the residential, non-residential and civil engineering sectors.
House building continued to rise in the three months to March, with the underlying value of private housing project starts up by 29%. This outweighed an 8% decline in the value of social housing starts.
Commercial activity also remains buoyant, with the value of office project starts rising 34%, retail 28% and hotel and leisure 15%.
In contrast, social housing, education, health and community & amenity starts all declined, indicating a clear divide between the private and public sectors. However this was offset by growth across the rest of the industry.
Civil engineering completes the view of broad industry growth after recording a 17% year on year increase in project starts. The infrastructure sector was a strong driver of the Glenigan Index during 2013, due to increased investment into roads and rail. However, work is expected to stabilise this year, with the value of infrastructure starts in the first quarter up by 1%.
Starts of utilities projects were up by 42% and activity in the sector looks set for further growth, with increased investment into renewable energy in particular. Industrial development has also seen a positive turnaround since this stage last year, with new project starts almost doubling in the first quarter of 2014 amid growing demand for manufacturing and logistics space.
The sectors most dependent on public funding have continued to perform less well. The value of health sector project starts fell by 14%, while community & amenity construction declined by 21%. A return to growth looks unlikely as government capital expenditure remains focused towards infrastructure investment.
After being the strongest growing market sector in 2013, the value of education starts fell in the first quarter of 2014. However, the prospects for the sector remain positive, with government funding streams such as the Priority School Building Programme (PSBP) likely to have an increased impact on the ground further into 2014.
The regional picture is one of rising activity across the south of the country, with the East of England continuing to see particularly fast growth. Starts also improved in the East Midlands, but fell back in the West Midlands for the third successive month.
Starts in the North West were up 49% compared with a year ago, but fell back in the North East and Yorkshire and the Humber.
Across the rest of the UK, the first quarter of 2014 was largely positive, following contrasting fortunes last year. Activity in Northern Ireland picked up strongly in 2013, as the Irish economy and housing market improved, and starts saw further growth in the first quarter of 2014. Growth in Scotland in 2013 was moderate but has now begun to accelerate, while activity in Wales continues to recover quickly from a tough 2013.
The Glenigan index of projects starts provides a leading indicator of construction activity in the UK. It is based on data collected about every construction project started on site in 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 £100million that could distort the overall picture.
A full copy of the Glenigan forecast is available upon request.