March start numbers down year-on-year

Construction鈥檚 traditional spring bump has been dampened this year by mounting inflation exacerbated by the war in Ukraine.

Project starts numbers for March were down 22% on the year prior, according to construction data specialist Glenigan鈥檚 latest construction index.

Seasonally adjusted, starts were also 7% lower than the previous three months.

Glenigan鈥檚 senior economist Rhys Gadsby said 鈥渙utside influences鈥� such as choked supply chains and rising energy costs were keeping new start levels depressed.

shutterstock_2132121977

Source: Shutterstock

Glenigan鈥檚 top economist said it would take time before the full economic impact of world events such as the war in Ukraine was known

Despite the gloomy national picture, he highlighted some 鈥済limmers of hope鈥� at the regional level, including the North East, which continues to be the country鈥檚 best performing region.

Northern Ireland saw the UK鈥檚 greatest increase against the previous year 鈥� up 29% 鈥� and Wales also saw growth against both the preceding quarter (10%) and previous year (3%).

Scotland, the East of England, East Midlands and Yorkshire & The Humber all saw growth against the previous quarter but a decline on the year before.

The value of residential work fell 5% during Q2 2022 and was down 32% on the previous year, while private housing starts saw a more modest 2% decline 鈥� however figures were still 37% lower than a year ago.

Social housing project starts dropped 12% against the previous quarter and 13% against Q1 for 2021.

In the non-residential sector, only office and education projects saw growth against the previous quarter 鈥� 28% and 6%, respectively.

While this still left education down 9% on a year ago, office project starts saw a 1% growth.

Hotel and leisure starts fell by more than a fifth, after growing 35% in the three months to January. However, value of work in the sector was 11% higher than the year before.

Industrial starts remained consistent with the previous quarter, which civils continued its downward trajectory, falling by nearly a third on the previous quarter and 38% lower than the year before. This was driven by utilities, with starts dropping by 52% on the previous quarter.

Infrastructure was 16% down on the three months prior and down by 34% on the year before.

Gadsby said it would 鈥渂e a while鈥� until the full impact of current world events was fully realised but added that he had 鈥渘o doubts that the resilience of UK construction can weather the storm鈥�.

Yesterday, escalating inflation and the impact of the war in Ukraine took the gloss off another rise in construction output with confidence in the sector sagging to a near 18-month low.

The latest PMI data drawn up by IHS Markit and CIPS said total activity for March stood at 59.1, unchanged from the month before.

But confidence slumped to its lowest level for 17 months with the survey say firms were jittery about the ongoing war in Ukraine, now in its seventh week, severe cost inflation and worries about the global economic outlook.

Topics