The construction sector continues to stall against a backdrop of ongoing economic uncertainty, borrowing costs and lingering investor caution, the latest Glenigan construction index reveals.
The index found the value of underlying work (under £100 million) starting on-site during the three months to the end of August declined 2% and dropped 20% below last year’s levels.
Meanwhile, data shows residential construction starts fell sharply, declining 15% against the preceding three months and dropping 36% compared with the previous year.
Private housing was the largest component of activity, with various projects supporting overall activity.
However, the sector declined 8% against the preceding three months and dropping 37% lower than a year ago.
Social housing also had a steep drop, falling 29% against the preceding three months and declining 30% on the previous year.
Non-residential project starts provided support, rising 6% quarter-on-quarter and standing 1% above a year ago.
Civils work starting on-site experienced a strong rebound, rising 23% against the preceding three months, although remaining 24% lower than the previous year.
Utilities activity rose 5% quarter-on-quarter but was 27% below last year’s level.
Glenigan economics director Allan Willen says: “After a rough start to the year, it’s fair to say the sector caught its breath over the summer and, whilst activity levels remain painfully low, they have stabilised. It’s a positive sign that the freefall, which began in Q2 has finally ground to a halt; That said, we’re not exactly climbing yet.”
“The real bright spot is non-residential, but a fresh cabinet, headed up by a new Prime Minister with new priorities could easily upset the apple cart. Even the sectors doing well have caveats attached.”
“Office fit-outs continue to hold up, although with occupancy rates remaining stubbornly low, it begs the question will developers keep backing new schemes. Meanwhile, residential remains a drag on overall activity, as developers weigh up site viability against higher construction costs and the looming building safety levy.”
