The value of projects starting on site dropped back further during the three months to July, according to the latest Glenigan analysis.
The recent decline follows a surge in starts during the first quarter and has been led by falls in private residential and civil engineering work. Looking ahead, the strengthening pattern of main contract awards points to renewed growth in project-starts during the second half of the year.
The value of projects starting on site averaged £5,497 million per month during the three months to July; a 14% decline against the preceding three months but 27% higher than a year ago. The fall against the preceding three months was due to a 19% decline (seasonally adjusted) in the value of underlying projects-starts (under £100m). Despite the decline, underlying starts were 36% up on the same period of last year, although they were 24% below pre-pandemic level seen two years earlier.
At an average of £1,740 million a month, major projects were unchanged against the preceding three months, 11% higher than a year ago but 2% down on the same period in 2019
Here we look at the performance of construction project-starts across all sectors of the industry in the three months to July 2021.
Housing sector project-starts
Adding up to £5,190 million, residential work starting on-site during the three months to July climbed 22% against the previous year. However, project-starts fell 38% against the same period in 2019. While underlying project-starts (less than £100 million in value) increased 36% against the previous year to total £4,610 million, the value fell by a third compared with the same period in 2019 as well as 28% against the preceding three months on a seasonally adjusted basis. Major project-starts (£100 million or more) declined 36% against the previous year and 63% compared with 2019 levels to total £540 million.
Office sector project-starts
Adding up to £1,710 million, the value of office work starting on-site during the three months to July increased by 78% against the previous year and 13% compared with the same period in 2019.
Growth was largely influenced by major project-starts (£100 million or more) which, at £655 million, climbed 130% against the previous year and 162% against 2019 levels.
Underlying starts (less than £100 million) totalled £1,055 million and increased 56% against the previous year and 14% compared with the preceding three months on a seasonally adjusted basis. However, underlying project-starts remained 16% lower than 2019 levels.
Retail sector project-starts
Project-starts and main contract awards continued to climb. While detailed planning approvals were down on the previous year, they remained relatively strong compared with other years.
Underlying retail work commencing on-site (less than £100 million) during the three months to July totalled £802 million, a 150% increase compared to a year ago and 34% growth against the same period in 2019. Underlying starts also climbed 83% against the preceding three months on a seasonally adjusted basis. No major project-starts (£100 million or more in value) occurred during the period, remaining unchanged on both the previous year and two years ago.
Hotel & Leisure sector project-starts
Project-starts rose significantly against the same period last year but remained behind 2019 levels. Main contract awards also improved while detailed planning approvals performed poorly.
Hotel & leisure project-starts totalled £1,400 million during the three months to July, a 121% increase compared with the previous year. However, the value fell by 33% compared with the same period in 2019. Underlying work starting on-site (less than £100 million in value) added up to £880 million and climbed 94% against the previous year as well as 52% compared with the preceding three months on a seasonally adjusted basis. However, the value remained 6% below 2019 levels. Major project-starts (£100 million or more in value) climbed 189% against the previous year but fell 55% compared with the same period in 2019 to total £520 million.
Health sector project-starts
Totalling £528 million, underlying health work starting on-site (less than £100 million in value) during the three months to July increased 7% against the previous year to stand 43% higher than the same period in 2019. Despite this, the value fell 12% against the preceding three months on a seasonally adjusted basis. No major projects (£100 million or more in value) commenced on-site during the period, although this was unchanged on both the previous year and two years ago.
Education sector project-starts
Underlying education work starting on-site (less than £100 million in value) totalled £1,106 million during the three months to July, a 2% increase against the previous year. However, underlying starts remained 33% below 2019 levels and fell 9% compared with the preceding three months on a seasonally adjusted basis. No major projects (£100 million or more) commenced on-site during the period, remaining unchanged on the previous year and two years ago.
Community & Amenity sector project-starts
Adding up to £154 million, community & amenity work starting on-site during the three months to July fell 57% against the previous year and 79% compared with the same period in 2019. An absence of any major project-starts (£100 million or more) largely influenced the decline.
Underlying starts (less than £100 million in value) were relatively weak and declined 18% against the preceding three months on a seasonally adjusted basis and 47% compared with the same period in 2019. More positively, underlying project-starts increased 4% against the previous year.
Civil Engineering sector project-starts
Civil engineering work starting on-site totalled £4,058 million during the three months to July, a 1% decline compared with the previous year. More positively, project-starts climbed 10% compared with the same period in 2019. Underlying project-starts (less than £100 million in value) totalled £1,058 million and increased 1% against the previous year. However, the value of underlying starts fell 41% against the preceding three months on a seasonally adjusted basis as well as 40% compared with two years ago. Major project-starts (£100 million or more) added up to £3,000 million and while they declined 2% against the previous year, the value increased 55% compared with the same period in 2019.
