News Construction Output Suffers Cold Snap

Declining levels of new civil engineering activity has dragged construction output into negative territory for the second time in three months, according to the latest figures from industry analysts Glenigan.

Output for February, which covers the value of projects starting on site in the three months to January, is 2% down on a year ago, stifled by a 17% drop in new civil engineering schemes.

Falling levels of social housing and public non-residential building have contributed to a subdued performance across the industry, with none of the main sectors expanding by more than 1% in the latest period.

However investor confidence and the flow of new developments remain strong, heralded by a 10% rise in the value of projects achieving detailed planning consent during 2014.

Glenigan has also found 1,250 previously stalled projects were brought back into development during 2014, a 13% rise on a year earlier.

Allan Wilén, economics director at Glenigan, said: “Our latest figures show the challenge the industry faces to keep up with its own momentum.

“At this stage a year ago workloads were expanding at a remarkable rate, with the January 2014 Glenigan Index seeing a record 35% increase in project starts – the peak of a 17-month run of consecutive growth.

“However this expansion moderated downwards through the end of last year.”

The industrial sector represents the brightest spot in this month’s Index. The sector saw starts rise by 46% in 2014 and has maintained this momentum into the New Year, with the latest reading showing a 48% increase relative to a year earlier.

This surge has been driven by strong demand for logistics and distribution space, with clients bringing forward a number of large schemes. Glenigan tracked 21 industrial projects worth between £20 million and £100 million starting on site during 2014, including the £77 million ‘Thunderbird 2’ distribution project in Kettering, Northamptonshire.

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A 40% year on year rise in detailed planning approvals in the final quarter of 2014 suggests the sector will remain a good source of work during the coming year.

Forecasts for the education sector are also positive, with the flow of school projects set to expand strongly over the coming year. Work under the Priority School Building Programme has so far been slow to materialise, contributing to the 12% fall in education starts over the last three months. However a 21% rise in detailed planning approvals over 2014 suggests an upcoming improvement in sector activity.

Meanwhile, the commercial sectors continue to perform solidly, with office, retail and hotel and leisure starts up by 2%, 5% and 10% respectively.

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