Annual growth makes a comeback in the construction industry

The construction industry has returned to growth after six months of contraction, according to the latest figures from industry analyst Glenigan. The value of projects starting on site in October was higher than a year earlier for the first time since March. The fastest rise was in residential building, with the value of starts up 9% on a year earlier. There was also a 19% rise in social-housing starts, the strongest expansion since the start of 2014.

The Glenigan figures are supported by the Markit/CIPS UK construction purchasing managers’ index, which showed strong growth in construction output in October, helped by the fastest rise in new work for12 months. Commercial building work was a key growth driver in October, according to Markit/CPS, as housing and civil-engineering activity both expanded at slower rates than in September.

Non-residential starts as a whole were up 4% on a year earlier, according to Glenigan, as growth in private-sector activity offset continued weakness across the public sector.

Industrial, office, retail and hotel and leisure starts all registered growth. However, those gains were tempered by a 7% decline in education starts and a plummet in the value of new health projects.

Allan Wilen, Glenigan’s economics director, comments, ‘The last three months have seen the commercial and industrial sectors finally shaking off the worries of earlier this year.’

There are variations across the country, though. Mr Wilen says, London has seen consistently weak levels of project starts and planning applications during 2015, after the rapid rates of expansion recorded during 2013 and 2014.

‘It is the English regions outside the capital that are leading growth, with the Midlands a particular hot spot.

The West Midlands saw starts up 37% on a year earlier and the East Midlands up by 28% during the three months to October. The north west of England saw a 27% rise in starts, with more-modest growth being recorded across the north east of England, Yorkshire & Humber and south-east England.

Indications of coming activity are even stronger. Glenigan has recorded rising values of work receiving planning approval in 11 of the 12 constituent English regions and nations of the UK. Only London saw approvals down compared to a year earlier during 2015 so far — up to the end of September.

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