Construction slows but civils surge

Published:  22 August, 2018

Civils are a bright spot on an otherwise dull horizon for construction, according to a recent report.

The latest figures from Glenigan, which provides data on the UK construction market, show a drop in both project starts and in value of the work started in the last year.

But civil engineering saw a 35% increase on 2017 due to strengthening in both infrastructure and utilities projects.

According to the report:

• Starts in the three months preceding July were 15% down on last year

• Residential starts were 20% lower than a year ago, with a weakening in both private and social housing projects

• Non-residential project starts were 18% lower than last year

• Civil engineering was 35% higher than last year due to a 12% increase in infrastructure starts and an 80% increase in utilities work

• The value of work starting on-site in the three months preceding July was 15% lower than last year

• London saw the sharpest decline in starts, at 45% down on last year

• The South East, East of England, Yorkshire & the Humber, Northern Ireland and Scotland also saw double-digit falls of 16%, 18%, 30%, 37% and 11% respectively

• The value of project starts in the East Midlands was 41% up on last year and was 14% higher in both the West Midlands and North East.

John Newcomb, CEO of the Builders Merchants Federation, said: “The private new homes sector has been extremely robust in recent years, so it is somewhat surprising to see residential starts fall back at this stage.

“It may be a hangover from the poor weather at the start of the year.

“However, repair, maintenance and improvement work continues to grow, with the Office of National Statistics reporting 0.9% growth in overall construction output.

“The BMF’s Builders Merchants Building Index reported 7.2% growth in sales value over Q2 2018, and we remain confident of continued growth throughout the rest of the year.”

Steve Turner, Director of Communications at the Home Builders’ Federation, added: “We have seen a massive 74% increase in the number of new homes built over the last four years, and all indicators suggest output will continue to grow. Demand for new homes remains extremely strong.

“Starts on new sites in the early part of the year were affected by the adverse weather that also hindered output on existing sites. We anticipate any falls will be reversed in the latter part of the year as builders continue to strive to build more, desperately needed homes.”

Allan Durning, Managing Director of the H&B Buying Group, said:

“Builders’ merchants have seen many cycles over the previous decades, and we manage through them.

“What’s interesting with the timing of this announcement is the current round of shortages of key primary building materials such as bricks, and Class B engineering bricks in particular. Plasterboard, and insulation amongst others.

The housing space remains buoyant as we know, fuelled by taxpayer’s subsidiaries, and RMI is holding up given the desire to ‘improve and not move’ at local levels.

“But we have to be conscious that capital projects, with the Brexit implications, is going to impact on investor confidence. Major organisations such as Barclay are currently commenting on their concerns about demand going forward.”

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