Construction Industry Showing Resilience
The February Glenigan Index suggests that the construction industry has stabilised during January. Published monthly by Glenigan, providers of business intelligence on the UK construction industry, the Index monitors and tracks the value of all new construction projects across the UK to provide a definitive guide to trends and forecasts for the construction industry.
Although the flow of new work in the industry is still at near record lows, the figures show circumstances are not getting worse.
With economic prospects still fragile, few developers are willing to push forward with new construction projects. In many regions the value of new projects was at least a fifth lower than in the same period last year. The Midlands and the North West of England have experienced the largest declines in the value of projects starting on site. Construction starts in Northern Ireland have shown some resilience, but this is not expected to continue.
“The Glenigan Index shows that successive interest rate cuts since last October have yet to revive the flow of new construction projects, with the index in January 27 per cent down on a year ago,” says Allan Wilén, Economics Director, Glenigan. “Accordingly whilst the latest bank base rate cut to a new historic low is welcome, urgent steps are also needed to improve access to mortgage and development finance and to accelerate the delivery of promised Government construction projects.”
Residential and non-residential prospects remain particularly grim. The residential index was 44 per cent down on a year ago during January. The recent trend in the Residential Index maps out an extremely difficult year ahead for the sector, with the greatest pain expected to be felt in the private housing sector. Demand indicators for the property market remain weak and there are no signs yet that banks have increased the flow of new lending. However, civil engineering has seen increased growth in part due to access to public finance.
The Glenigan Index is based on Glenigan’s extensive database of construction projects, and tracks the monthly flow of construction projects valued from £100,000 up to £100 million starting on site each month.