Construction growth rate dips following social-housing slowdown
The Glenigan Index for August showed a 10% year-on-year increase, but with growth dropping to the lowest level since February 2014. The index covers the value of projects starting on side from May to June and eased from 15% recorded last month, mainly due to a slowdown in new residential work, with social housing activity down by 11%.
The underlying value of residential starts recorded its lowest rise since April 2013, rising just 4% compared to a year ago. However, underneath this headline figure is a divergence between the private and social housing sectors. Private housing starts rose by 16% on a year ago, with social housing starts falling by 11%.
Glenigan data suggests this relative dip will not knock the industry out of the steady groove it has found in 2014.
Hotel and leisure starts were up 2% on a year ago, while retail saw a 1% drop. This compares with rises of more than 40% in the value of office and industrial starts.
Allan Wilén, economics director at Glenigan, said, ‘Readings from the last six months have shown the underlying value of project starts expanding at rates of around 12% each month. This is below the breakneck rises of 20 and 28% seen in the third and fourth quarters of last year but nonetheless represents a very healthy level of expansion.
‘The flow of main-contract awards shows plenty more work waiting in the wings. In total, £26.4 billion of work was secured in the first half of 2014, a 17% rise of a year earlier, with contractors strengthening their order books across the whole range of industry sectors.’