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Gleniganindex
May 2014
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Construction growth picks up pace
as industry continues to strengthen
Glenigan
Index
G
rises
10%
in
help sustain this growth in the
longer term.
overnment
improvements to bolster the
private housing industry
are continuing to translate into
a rise in the value of new starts.
In the short-term, Glenigan
expects growth in this sector
to be driven by utilities, where
starts are up 47% on a year ago,
particularly renewable energy.
Private housing starts rose for
a thirteenth consecutive month
in April and are compensating
for a stall in the value of social
housing starts, which had
outstripped private starts at the
end of 2013.
This should be accompanied
by a continued toughening in
the value of non-residential
construction, which rose by 5%
in April.
In the most recent period, the
value of social housing starts fell
by 6%, although sector activity
remains 22% up year-on-year.
Only civil engineering work has
enjoyed a larger annualised
percentage in the past year and
the decision to back the first
phase of the High Speed 2 rail
link between London and the
West Midlands in April should
The early part of 2014 saw
growth soften in this sector,
but the value of non-residential
starts has still climbed for nine
consecutive months according
to the Glenigan Index.
three
months
There is also evidence
significant
improvement
to
April
2014
privately-funded non-residential
work with the value of starts in
the retail, industrial and office
sectors up by 11%, 13% and
15% over the year to April 2014.
compensating for weakness
in other public sector areas,
notably health.
of
in
GLENIGAN INDEX
120
110
100
90
80
70
Index (2006=100)
60
50
40
This has been driven by a rise
in the value of education starts,
which
is
more
than
AA
MM
JJ
JJ
AA
SS
OO
2013
NN
DD
JJ
FF
MM
AA
2014
GDP translates into orders boost
OUTLOOK
A
In April 2014, the index recorded
its fastest growth since with
sustained improvement in all
three main sectors.
continued rise in the
estimates for growth
in
Gross
Domestic
Product (GDP) suggests that
the renewed buoyancy in the
Glenigan
Index
will
be
sustained.
This comes as the most recent
preliminary estimate from the
30%
Change on previous year
the
Index (2006=100)
•
25%
20%
15%
Change on previous year
10%
5%
0%
-5%
Change on previous year
J
Change on previous year
-10%
-15% year
Change on previous
Change on previous yearJ F
M
F
A
M
M
A
J
M
J
J
A
J
S
A
O
S
N
N
O
D
J
D
F
J
M
F
A
M
M
2014
J
F
M
A
J
M
F
M
A
M
J
J
F
F
A
J
M
J
J
A
J
S
A
O
S
N
O
N
D
2015
J
J
A
S
D
J
F
M
A
S
O
N
D
J
M
A
J
O
N
J
F
M
A
M
J
J
A
S
D
J
O
N
J
A
S
O
N
D
M A M J J A S O N D J F M A M J J A S O N D
M A M J J A S O N D J F M A M J J A S O N D
D
Office for National Statistics
(ONS) showed that UK GDP
grew by 0.8% in the first quarter
of 2014 and was 3.1% ahead of
the same period a year ago.
The Glenigan Index is also
gaining pace. After a bumper
start to 2014, the pace of growth
slipped back in February but
remained positive with rises of
5%, 6% and then into double
figures at 10% in April.
This buoyancy is supported
by
the
Royal
Institution
of
Chartered
Surveyors
Construction Market Survey for
the first quarter of 2014, which
found that expectations of
workload growth in the next year
are at a series high.
As the industry comes out of
recession and workloads continue to strengthen, capacity could
become an issue as companies
come to terms with issues such
as cost inflation and cash flow.
This could already be having
an impact as the number of
construction
companies
entering administration in the
first quarter of 2014 actually
rose according to figures from
the Department for Business
Innovation and Skills.
A detailed analysis of these
challenges can be found in
Glenigan’s
special
report,
Post-Recession Risks: What
every construction company
needs to know.
For more insight go to www.glenigan.com/analysis
WWW.GLENIGAN.COM/REGIONS
% change
12-months
to April
2014
Scotland +17%
Three months to Apr
- Change on a year ago
North
East
29%
% change
12-months
to April
2014
North
West
Northern
Ireland -19%
% change
12-months
to April
2014
15%
+24%
+20% Yorkshire
-14%
% change
12-months
to April
2014
EAST ANGLIA
30%
13%
NORTH EAST
LONDON
EAST MIDLANDS
The Regional Picture
18%
% change
12-months
to April
2014
16%
% change
12-months
to April
2014
9%
% change
12-months
to April
2014
South West
+36%
-5%
+70%
19%
London +16%
South East
+14%
Regional overview
The pick-up in construction work across the British regions
continued into April according to Glenigan’s research.
Eight of the 12 regions experienced growth in the last three
months. An influx of education work in both the West and East
Midlands failed to boost starts in these regions and Yorkshire
and Humberside also receded; however the rest of Britain
experienced growth.
The often volatile Northern Irish construction market also
experienced a fall in the value of new starts in the last three
months, but on an annual basis the picture is much brighter.
From this viewpoint, starts in Northern Ireland, every English
region and Scotland are all in positive territory. Only Wales
fell, but with the value of new starts surging by 47% in the last
quarter in the region, a rebound here seems likely as work
recovers from a low ebb.
Output growth in Wales should grow faster with a CITB
Construction Skills survey suggesting a rise of 3.4% over the
next five years against a national average of 2.2%, driven
mainly by private housing aided by the introduction of Help
to Buy in Wales.
The region experiencing the strongest growth over the most
recent quarter and also the year to April 2014 was the East
of England, with rises of 70% and 30% respectively.
Percentages in Charts compare 12 months to April 2014 to previous 12 months
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% change
12-months
to April
2014
21%
% change
12-months
to April
2014
-12%
% change
12-months
to April
2014
-8%
% change
12-months
to April
2014
NORTHERN IRELAND
+47%
East of
England
SOUTH EAST
% change
12-months
to April
2014
Wales
-1%
WALES
15%
West
Midlands
YORKSHIRE
WEST MIDLANDS
SOUTH WEST
SCOTLAND
NORTH WEST
East
Midlands
WWW.GLENIGAN.COM/SECTORS
HOTEL & LEISURE
+21%
Glenigan data shows a 17% rise in
new starts in the most recent three
months. In the year to April 2014,
the growth is even more marked
- up by 21%. Outside of civil
engineering and social housing,
education
has
grown
the
fastest of the 10 sectors tracked by
Glenigan.
The region experiencing the
largest proportion of this growth so
far in 2014 is the West Midlands.
Outside of London and the South
East, the West Midlands also
saw the largest amount of new
education starts in 2014.
+11%
This looks set to continue as a
number of projects in the
Midlands and London have been
included in the Education Funding
Agency’s (EFA) £4 billion Priority
Schools Building Programme. This
framework was revamped last
November and the first batch
awarded in March was in the
Midlands.
-7%
The EFA’s PF2 initiative has also
seen growth in the Midlands as
procurement moves forward on
more than £500 million worth of
work.
Another 39 education projects
were identified at the end of last
year in another state education
initiative, the £820 million Targeted
Basic Need programme, which will
eventually see 41 new schools
built and another 331 expanded.
This suggests that the growth
experienced in this sector looks
set to be sustained.
HEALTH
+24%
ome publicly-funded sectors,
notably health and community
and amenity work, are still
struggling from the impact of
austerity cuts but after a period of
decline, new education work has
returned to growth.
-19%
INDUSTRIAL
S
COMMUNITY & AMENITY
Sectors: Education
EDUCATION
CIVIL ENGINEERING
Sector Performance
+13%
+11%
2010
2011
2012
2013
2014 ytd*
2013
ytd
East Midlands
401
295
263
385
79
91
East of England
548
523
526
491
182
254
London
907
1183
653
1040
210
150
North East
297
156
121
116
143
66
Northern Ireland
80
77
19
98
286
20
North West
904
671
459
594
113
19
South East
561
813
569
671
212
109
South West
291
252
402
303
178
328
Scotland
581
563
408
561
159
176
West Midlands
607
750
384
652
337
131
Wales
272
244
283
147
294
68
Yorkshire &
the Humber
748
609
383
365
116
92
Underlying value of construction projects starting on site. (Excludes individual projects of more
than £100 million and framework agreements). *April 2014
+11%
+22%
Percentages in Charts compare 12 months to April 2014 to previous 12 months
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PRIVATE HOUSING
Region
SOCIAL HOUSING
+15%
RETAIL
OFFICES & COMMERCIAL
Education Construction (£ million)
SUBSCRIPTION INFORMATION
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Glenigan May 2014
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