UK construction growth flatlined in the final quarter of 2014 due to a slowdown in new civil engineering project starts, according to market analyst Glenigan’s latest figures, released today.
The ‘Glenigan Index’ for January, which covers the value of projects starting on site during the three months to December, is flat compared to a year earlier with a 14% drop in civil engineering activity cancelling out a 4% rise in non-residential starts.
Meanwhile the latest Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) report, released yesterday, signalled the least marked increase in construction output since July 2013.
It shows that overall output growth continued across the sector in December, but the strength of the recovery moderated further from peaks seen earlier in the year. At 57.6, down from 59.4 in November, the latest index was still higher than the long term average (54.5).
Indeed Glenigan reports that private housing starts increased by 7% in the final quarter, resulting in a 15% rise for 2014 as a whole. It also revealed that the office and industrial sectors each saw double digit growth compared to a year earlier although education and retail starts fell back.
Both reports show optimism for the year ahead. Glenigan data suggests the industry remains in a strong position going into 2015, buoyed by 10% growth in project starts last year – matching pre-recession levels. More than half of the Markit/CIPS UK Construction PMI survey panel (52%) anticipate a rise in business activity over the course of 2015, while only 13% forecast a reduction.
Glenigan economics director Allan Wilén said: "While the industry appears to have been catching its breath during the final quarter, this should be no cause for alarm. Construction starts grew by 10% in 2014, on a par with 2007 and the fastest pace for seven years.
“The forward pipeline is also encouraging. In contrast to the pause in starts over the last three months, the flow of projects achieving planning approval has accelerated.”
Image: A graph showing the Glenigan Index for January. Source: Glenigan