Private sector dominates growth in Glenigan index
Project starts in the period January to March 2014 were up in value to 15% compared to the same period in 2013, according to the latest Glenigan Index — driven by double-digit growth across the non-residential, residential and civil-engineering sectors. Positive indications across the commercial sectors continue to gather momentum, with office project starts rising by 34%, retail by 28% and leisure by 15%.
Private housing remains a key driver of increasing construction activity, with project starts up by 29%. This growth outweighed an 8% decline in the value of social-housing starts.
There was also a decline in the value of starts for education, health and community and amenity starts — indicating a clear divide between the private and public sectors.
Commenting on the figures, Allan Wilén, economics director at Glenigan, said, ‘Increasingly, we are seeing improved business sentiment translating into real investment across the economy. The positive project data within the commercial sectors in particular shows that firms and developers are more confident putting money into new construction.’
The sectors most dependent on public funding have continued to perform less well. The value of project starts on the health sector fell by 14% and community and amenity construction by 21%. A return to growth looks unlikely as Government capital expenditure remains focused towards infrastructure investment.
Having been the strongest-growing market sector in 2013, the value of education starts fell in the first quarter of 2014. However, the prospects for the sector remain positive, with Government funding streams such as the Priority School Building Programme likely to have an increased impact on the ground further into 2014.
The regional picture is one of rising activity across southern UK regions, with the east of England continuing to see particularly fast growth. Starts also improved in the East Midlands, but fell back in the West Midlands for the third successive month.
Further north, starts in the North West were up 49% compared to a year ago, but starts fell back in the North East and Yorkshire and the Humber.
Across the rest of the UK, the first quarter of 2014 was largely positive following contrasting fortunes last year. Activity in Northern Ireland picked up strongly in 2013, as the Irish economy and housing market improved, and starts saw further growth in the first quarter of 2014. Growth in Scotland in 2013 was moderate but has now begun to accelerate, while activity in Wales continues to recover quickly from a tough 2013.