The value of underlying work starting on-site during the three months to June, fell 5% against the preceding three months, standing 39% lower than a year ago.
The continued weakening in project-starts in Q2 is disappointing but unsurprising. Project starts are likely to continue to dwindle into the latter part of the year, mainly due to the UK’s stagnant economic situation.
According to Glenigan, the weak economic outlook has dented investor and consumer confidence further, stifling private sector activity.
Residential project starts increased by 10%
Residential construction starts increased 10% on the preceding 3 months, but 40% lower than a year ago. The modest sign of recovery is encouraging, which will be welcomed by many housebuilders, whose activity stalled due to market conditions and a plethora of new regulations.
Non-Residential starts decreased, particularly in civil engineering
Non-residential project-starts decreased 11% against the last 3 months, down 30% on a year ago.
Civil engineering project starts continue to decline
Civils starts have disappointed, which is a shame, given the Prime Minister and Chancellor’s big commitments to critical infrastructure.
April saw the push back of several infrastructure projects such as the 7km tunnel between Old Oak Common and Euston. This was after the project to build the central London terminus was put on hold because of a spike in costs.
In the three months to June, Civil engineering starts were down 40% against the preceding 3 months, 54% lower than a year ago. This is due, in part, to sharp drops in infrastructure approvals throughout 2022, feeding through to this year.
The Glenigan Construction Forecast expects the industry to return to growth in 2024 as UK economic prospects improve.
In the recent forecast, Glenigan predicted that civil engineering starts will soften as the sharp drop in infrastructure approvals in 2022 feeds through to a decline in starts in 2023.
Utilities project-starts are expected to stabilise this year, before returning to growth from 2024 as the water industry presses on with investment agreed with the industry regulator.
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