Rise in project starts provide a brighter finish to turbulent 2017

• Starts in the final three months of 2017 were 1% ahead of a year earlier.
• Residential starts were 2% higher, due to a pick up in private housing activity which more than offset the impact of fewer social housing projects.
• Non-residential project starts were 2% lower than during the same period in 2016 as a declines in office and health projects outweighed increases in education, retail and industrial work.
• Civil engineering starts were 12% ahead of weak performance a year ago, although they slipped back 8% on a seasonally adjusted basis against strong a third quarter.
• The value of work starting on site in the three months to December was 1% up on the same period a year earlier, according to the latest Glenigan Index. On a seasonally adjusted basis, starts were 3% higher than during the third quarter of last year.

The industry finished 2017 on a firmer footing according to the latest Glenigan Index data for project starts. After the retrenchment seen since the summer, the flow of projects starts picked-up during the closing months of 2017. The value of starts in the final quarter of the year was 1% up on a year earlier and on a seasonally adjusted basis rose 3% against the preceding three months. The improved fourth quarter performance trimmed the overall decline in project starts last year to 4.1%.

An improvement in the private housing sector during the closing months of last year has been an important driver behind the rise in construction project starts; previously weak private residential projects starts had been a particular drag on overall starts since the summer. Private residential starts were 10% higher than during the same period last year. In contrast social housing starts have continued to slip back, being 21% down on the third quarter on a seasonally adjusted basis and 16% lower than a year ago.

Overall non-residential projects were 2% lower than a year ago and 5% down on the third quarter on a seasonally adjusted basis. The year on year decline is attributable to a 22% drop in office project starts and persistent weakness in public sector funded areas such as health and community & amenity projects. However, industrial projects starts were 17% up on a weak performance a year ago, while education starts increased 6% and retail starts were up 44% on a year ago.

Civil engineering starts were 12% up on a year ago. Infrastructure work has been the driver for the year-on-year rise in civils activity, whilst there has been a weakening in utilities work.

Scotland saw the sharpest rise in project starts during the final quarter of 2017, with starts 55% higher than a year earlier. There was also strong year on year growth in the South East, South West and North East of England and in Yorkshire and the Humber, with increases of 15%, 37%, 31% and 26% respectively.  The value of project starts fell back sharply in the East of England, London and Northern Ireland.

Nationally project starts fell back 4% during 2017 as whole. The sharpest fall in the value of starts was in Northern Ireland, declining by 40%. There were also smaller declines in starts in London, East Midlands, North West, South East, West Midlands and Wales. However, project starts bucked the national trend in the East of England, the North East, South West, Scotland and Yorkshire and the Humber, growing by 7%, 9%, 12%, 12% and 11% respectively.

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