An Issue Of Trust For Ms Truss
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Read Full ArticleUnderlying work commencing on site has fallen 35% against the preceding three months to August and 30% lower than a year ago – and residential starts have plummeted 38% on the preceding three-month period and 28% against the previous year.
Meanwhile, non-residential project-starts are down 31% against the preceding three months and 34% compared with a year ago.
The figures come from construction industry analyst Glenigan and the September 2022 edition of its Construction Index. The Index focuses on the three months to the end of August 2022, covering all underlying projects with a total value of £100 million or less (unless otherwise indicated), with all figures seasonally adjusted.
Economic uncertainty
Construction has experienced considerable disruption in recent months, the Index unsurprisingly says and industry recovery continues to be held back by a variety of external factors including supply chain issues and rising energy costs as materials inflation continues to accelerate.
As observed in previous Glenigan Indexes, delayed project-starts continue to squeeze the sector and a recent drop-off in contract awards and planning approvals has derailed Q.1 and Q.2 2022’s strong developmental pipeline.
Residential
Residential project-starts weakened significantly during the three months to August, with the value falling 38% against the preceding three months to stand 28% lower than a year ago.
Similar to the August Index, social housing project-start performance was especially poor, declining 38% against the preceding three months and standing 40% down on the same time last year.
Private housing-starts also faltered, declining 38% against the previous three months and dropping 24% compared with a year ago.
Non-residential
Overall, non-residential project-starts experienced across-the-board decline, falling 31% against the preceding three-month period and 34% compared with the year before.
Civil engineering-starts have also dropped 27% against the preceding three months and 25% compared to a year ago.
Regional outlook
UK regional performance was extremely poor, reflecting the sector’s overall decline. Northern Ireland was the highest performing region, and the only region to experience growth against the previous year, with a value increase of 87%. All other UK regions registered a decline compared with the year before.
Wales experienced a relatively good period compared to other regions, with project-starts seeing a modest decline of 6% against the preceding three months and 8% compared with the previous year.
London posted the weakest period for project-starts, with the value declining 55% compared with the preceding three months to stand 62% lower than a year ago.
The East Midlands and Scotland both endured steep falls during the three months to August to stand 37% and 35% lower than the same time last year.
Russian ripples
Commenting on the findings in the August Index, Glenigan’s Economics Director Allan Wilen says, “The sharp drop in project-starts is a disappointing yet unsurprising turn of events. Recovery continues to be hampered by materials, energy and fuel inflation caused by the Russia-Ukraine war and now inflation spikes, higher taxes and more stringent building regulations are catching up with construction firms and constraining activity.
“The uncertain economic outlook has prompted construction firms to reappraise and revise projects, resulting in a shrinking development pipeline. It’s now having a knock-on effect on project-starts. This lull in activity is likely to continue in the near future.”
Picture: Project starts have fallen fueling fear of a recession looming.
Article written by Cathryn Ellis
07th September 2022