The value of projects started on site grew by 10% in the year to February thanks to strength in new infrastructure and private sector non residential demand, according to the latest Glenigan Index.
Rising civil engineering was the main driver of widespread growth, says Glenigan, with the value of infrastructure starts up 64% from a year ago during the three months to February. The utilities sector saw growth of 45% compared to the same period a year ago.
The office sector soared with project starts increasing by 52% over the 12 months, and clear signs of a revival in private sector manufacturing sector investment are seen in a 16% growth in industrial and construction project starts.
Glenigan’s residential index fell 2% overall due to the recent storms and flooding. Private housing growth slowed to 5% while social housing starts fell 15% as flooding delayed starts on site.
Glenigan’s analysts say the recent flooding is likely to have a negative impact on the UK economy overall, largely because of transport disruption and business closures in the worst hit areas. A rise in repair and maintenance is expected to be seen in statistics later this year as a result of flood and storm damage. This is already being seen in railway related repair and strengthening works in the south east and south west of England.
The hotel and leisure sector, which has been sluggish due to doubts about when spending on discretionary travel and leisure would recover, returned to growth, staging an impressive 21% rise in project starts. Retail starts remained subdued, at just under the level of a year previously.
The public sector remains quiet with health projects falling 43% compared to a year previously. Education grew 17% over the 12 months although there was a slow down in the last quarter.
Glenigan Economics Director Alan Wilen said: “Private sector investment is the main driver behind the latest 10% rise in construction project starts. Glenigan has recorded growth in the commercial and industrial property sectors that will feed through as higher industry workload during 2014 and 2015. Civil engineering also remains a hot spot, due to increases in infrastructure and utilities work.”
Graph shows construction growth has continued despite flooding disruption, © Glenigan
