Construction-starts flatlined in February
Quarter 1 performance continues to falter in the midst of economic uncertainty according to Glenigan.
The Glenigan index reviews the poor performance for Quarter 1. Meanwhile, the economic director has hope for a boost in project-starts in Q2 and Q3.
Sector-wide decline in quarter 1 performance
The Glenigan index of construction starts to the end of February shows a sector-wide decline amid price inflation and economic uncertainty. A lukewarm investor appetite was also cited as a contributing factor along with the ongoing ripple effect of international conflict.
This is evidenced by a whopping 40% drop in the value of project starts compared to 2022 figures and a 22% decline against the preceding three months.
• Residential construction starts slipped back 27% on the preceding three months and 43% against the previous year.
• Non-residential project-starts fell by 19% against the preceding three months, finishing 38% lower than a year ago.
• Civil engineering work starting on-site declined 8% against the preceding three months, 17% down against the previous year.
Regional analysis of quarter 1 performance
Most regions experienced a weakening in project starts. The North East remained a relatively bright spot in the general gloom, as there was a 19% increase in starts against the preceding three months. Despite this, it was 20% behind last year.
Similarly, the amount of project starts in the South East was up 5% but down 27% year-on-year. Yorkshire and Humber suffered the most, declining 53% against the previous 3 months, to stand 61% lower than last year.
Investors holding back
The downward trajectory given the current economic malaise is hardly surprising, according to Glenigan’s Economic Director, Allan Wilen. He states that the poor performance reflects ‘the ongoing ripple effect of international conflict, weak economic policy, disrupted supply chains, and rising costs.’
Investors have been spending thriftily with many of them holding back. This is having a knock-on effect for construction, prompting contractors to follow suit and ride out the storm before committing shovel to soil.
Interest rates will not rise as much as initially expected
According to Glenigan, the political stability in recent weeks and expectations that interest rates will not rise as significantly as initially feared, are building confidence. In addition, there is a promised Government investment in large-scale infrastructure projects. These factors will hopefully provide a much-needed shot in the arm to boost performance in Q2 and Q3.
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