Project starts plummet by 40%, says Glenigan

The past three months saw a 40 per cent drop in the value of new construction work compared with the same period 12 months ago, according to the latest market analysis.

The March edition of Glenigan’s construction index – which measures all underlying projects with a total value of £100m or less – paints a grim picture of continually declining performance amid price inflation, economic uncertainty, and lukewarm investor appetite.

Glenigan found that the value of underlying work starting onsite during the three months to February fell 22 per cent against the preceding three-month period to stand 40 per cent lower than a year ago.

Residential construction starts slipped back 27 per cent on the preceding three months and 43 per cent against the previous year, while non-residential project starts fell by 19 per cent against the preceding three months to stand 38 per cent down on a year ago.

Civil engineering work starting onsite declined 8 per cent against the preceding three months – 17 per cent down against the previous year.

Yorkshire & the Humber suffered the heaviest fall in project starts, declining 53 per cent against the previous three months to stand 61 per cent down on a year ago.

London and the South West weakened against the preceding three months, falling back 18 per cent and 15 per cent respectively, while Scotland, the East Midlands, West Midlands and North West all fared even worse.

The North East fared relatively well, with project starts increasing 19 per cent against the preceding three months, although they failed to match 2022 levels.

Similarly, the South East saw the value of project starts increase 5 per cent on the previous quarter but remain significantly down on the year before.

Glenigan economics director Allan Wilen said the results were only to be expected given the impact of market conditions on recent activity.

“Many will be disappointed to see performance levels continue to proceed on their downward trajectory, but given the current economic malaise it’s hardly surprising,” he said.

“The year got off on a slow footing, with a further weakening in project starts during the three months to February reflecting the ongoing ripple effect of international conflict, weak economic policy, disrupted supply chains and rising costs.”

Consumers and investors were spending thriftily, with many holding back until a degree of certainty returned to the economy, Wilen added.

“This is having a knock-on effect for the construction sector, prompting many contractors to follow suit and ride out the storm before committing shovel to soil,” he said.

“Nevertheless, improved political stability in recent weeks and expectations that interest rates will not rise as significantly as initially feared, combined with promised government investment in largescale infrastructure projects, will hopefully provide a much-needed shot in the arm to boost performance in Q2 and Q3.”

The analysis came after Glenigan noted last month that project starts as a whole had almost halved in the three months to January, with projects worth £100m or more hit particularly badly.