Project-starts weaken after Q1 peak

The latest construction index from Glenigans has found that the value of underlying project-starts under £100 million in value, dropped by 10% during the second quarter of 2021.

Project-starts were 49% higher than a year ago, however when compared to the second quarter of 2019 project-starts were 18% lower. However, material supply problems could be creating delays in new work getting underway.

Rhys Gadsby, Glenigan’s economic analyst, said: “Positively, project-starts remain substantially up on the lockdown-affected previous year, with only two sectors and one region not experiencing growth. However, project-starts have slipped back after the first quarter surge in activity and remain below pre-pandemic levels across the majority of sectors and regions.”

Residential work starting on-site experienced the sharpest increase against the previous year of 79%, project-starts fell 20% against the preceding quarter and were 16% lower than two years ago.

Non-residential project-starts climbed 4% against the preceding quarter to stand 39% up on a year ago. However, against the same period in 2019 project-starts declined 21%.

Underlying civil engineering-starts increased 6% against the previous year but fell 13% against the preceding quarter and by a fifth compared with the same period in 2019

Mr Gadsby added: “With project-starts performing so strongly in the first quarter, largely due to pent-up demand, a slowdown in project-starts was largely expected. In addition, material supply problems may also be delaying the start of some projects. However, detailed planning approvals and main contract awards remain high, pointing to a strong pipeline of projects. A further strengthening in starts and an easing of material supply delays is anticipated over the coming months.”