Glenigan, one of the construction industry’s leading insight and intelligence experts, has released the October edition of its Construction Review.
This monthly report provides a detailed and comprehensive analysis of construction data, giving built environment and property professionals a unique insight into sector results, from the three months to the end of September 2021.
A significant takeaway from October’s figures is the value of approved major planning consents, which has increased 89% on the same time period (three months to September) in 2019, creating a firm development pipeline for the foreseeable future.
Despite a 9% slip in the value of main contracts awards against the previous three months of this year, the sector still remains up by 13% on last year’s figures. Underlying contract awards (less than £100m in value) also strengthened, rising 6% (SA) on the previous three months to stand 35% up on a year ago.
Construction output remains strong
Overall, construction output remains substantially ahead of pandemic-disrupted levels, increasing overall by nearly a fifth (18.3% year-on-year) in the three months to September. Recent decline has been registered in the softening of project starts over the last six months, caused by disruption to projects on-site, mainly due to supply chain problems.
Industry leads the way
Industrial was the stand-out sector during Q3, with underlying project-starts (less than £100m in value) pushing up 3% (SA) on the previous quarter and by nearly a half on 2020 figures (47%). Figures were also 13% higher than Q3 2019.
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This jump can be partly attributed to a handful of major project-starts including the £76 million East Midlands Distribution Centre in Castle Donington, the £60 million Ivory Infinity Park also in Derbyshire and a £82 million wind turbine factory for Siemens on Alexandra Dock, Hull.
Positivity for other sectors
Other sectors have indicated green shoots of recovery with underlying office starts up by 38% in Q3 against 2020 levels and 19% compared with the same period in 2019. Underlying activity was largely driven by refurbishment schemes, including the £77 million Long Acre Office refurbishment in London.
As for Hotel and Leisure project-starts, an increase against the previous year by nearly a half (49%) offers optimism, particularly after a difficult period post-pandemic.
Health starts were also up by 7% on 2019 figures but fell 18% compared with 2021’s Q2. It was also a strong period for office projects starts, increasing 4% (SA) on Q2 and 38% on the previous year.
According to the CIPS (Chartered Institute of Procurement and Supply) supply chain delays, slow new order growth and rising material and labour shortages inhibited UK manufacturing activity in September, impacting construction output. Compounded by staff shortages, it has led to a rise in unfinished work.
Construction has faced further challenges, with mounting inflationary pressures building rapidly during 2021 as UK and global economies have unlocked. Disrupted supply chains have also exacerbated fuel, material, and labour shortages. Commenting on the October Review, Glenigan’s Senior Economic Director, Allan Wilen, said, “It’s been a tough time for construction and the UK economy in general, with outside influences such as wider supply chain issues and rising material costs hampering progress.
“Despite this, we can see the industry is still riding out the current storm with major planning approvals and the value of main contracts awards up significantly on 2019 and 2020 levels.”
He continued, “It’s also promising to see some strong sector specific results, particularly for Industry, Offices and Hotel and Leisure, proving a bounce-back to pre-pandemic is still on the table.”
In order to request a copy of Glenigan’s full October Construction Review, with sector-by-sector analysis, click here.
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