Construction projects starts fall in first quarter of 2019

• Starts in the three months to March fell 7% against the preceding three months and were 6% lower than a year ago.
• Residential starts were 10% lower than a year ago and 9% down on the preceding three months. 
• Non-residential project starts were 7% lower than a year ago due to falls in both private and public sector funded work.
• Civil engineering starts rose 17% against the preceding three months and were 17% up on a year ago.

The value of work starting on site during the first quarter of 2019 was 6% lower than a year earlier, according to the latest Glenigan Index. Starts were also 7% down against the previous three months on a seasonally adjusted basis.

Commenting on this month’s figures, Allan Wilén, Glenigan’s Economics Director, said: “Residential and non-residential construction work weakened during the first quarter as poor economic growth and Brexit uncertainty continued to deter private sector investment in new projects. The drop in private sector work was accompanied by a disappointing fall in starts in public sector funded areas such as health and education. In contrast civil engineering projects provided a welcome bright spot with increased starts both against the previous three months and a year ago.  

“Private residential starts during the three months to March were 8% down on the same period a year ago. On a seasonally adjusted basis starts were 6% lower than during the final three of 2018. Project starts have progressively declined since last autumn against a backdrop of fewer property transactions and weaker house price inflation in the wider housing market. Political and economic uncertainties are expected to continue to dampen housing market activity and private housing project starts in the near term. Social housing starts fell 15% both against the three months to December and a year ago.

“Overall non-residential projects dropped 9% against the preceding three months on a seasonally adjusted basis and were 7% lower than a year ago. Private sector starts have weakened with industrial, office and retail work falling during the first quarter by 5%, 4% and 10% respectively against a year ago. There were also falls in government funded sectors. Education starts were 19% down on a year ago, while the health and community & amenity sectors dropped 4% and 22% respectively. The hotel & leisure sector was a bright spot, rising 18% year on year. 

“Civil engineering starts rose 17% against the three months to December on a seasonally adjusted basis and were also 17% up on a year ago. The rise in project starts was driven by a 34% rise (seasonally adjusted) in infrastructure work against the previous three months. In contrast utilities projects slipped back after a surge in starts during the final quarter of last year.  

Whilst most parts of the UK saw falls in the value of project starts against a year ago, starts rose in the southern half of England, with London, the South East and South West seeing increases of 13%, 12% and 19% respectively. Regionally the sharpest fall was in the East of England, with starts declining by 35%. The North East, North West, West Midlands and Scotland also all saw declines of 20% or more against a year ago. 

Glenigan Indices (underlying* projects up to £100 million)