Thursday, 15 January 2015

UK Construction Market Update - December

The Glenigan Index has been published for January 2015, which covers the value of projects starting on site during the three months to December 2014. These figures show that the index is flat compared to a year ago, with a 14% fall in Civil engineering activity which is masking a 4% rise in non-residential starts. However the data also suggests the industry remains in a strong position going into 2015, due to a growth in project starts of 10% in 2014, matching pre-recession levels.

The ONS have released their Output in the Construction Industry for November 2014. These show that in November 2014, output was estimated to have decreased by 2% compared with October 2014, with repair and maintenance being the largest contributor to this fall. However, output for November 2014 showed an increase of 3.6% when compared with November 2013.

The RICS UK Construction Market Survey shows that despite a further rise in skill shortages, private commercial workloads continue to increase strongly. Over half of respondents (52% net balance) reported that workloads in the commercial sector had grown in Q4 2014. RICS members’ anticipate growth in workloads of 3.4% in 2015 with jobs in the sector expected to rise by a further 3%.

Experian have release their construction forecasts for 2014 – 2016. These forecast average UK construction growth of 6% in 2015, before dropping to 3.6% in 2016. Private housing and infrastructure are expected to be the best performing sectors over the coming years.

The Markit/CIPS Construction Purchasing Managers Index shows the pace of construction growth easing for the third month running, with the least marked increase in construction output for 17 months. The index shows a fall from 59.4 in November 2014 to 57.6 in December 2014; however this is still higher than the long-run series average of 54.5.

UK Construction PMI - December: 57.6
The Nationwide House Price Index reports that in December 2014 house prices rose by 0.2%, with annual house price growth slowing to 7.2%. And London is the top performing region for 2014 with house prices being 17.8% higher than a year ago, which is now 35% above the 2007 peak. Also The Halifax House Price Index reports that in December 2014 house prices showed an increase of 0.9%. However annual house price growth has fallen from a peak of 10.2% in July 2014 and is now at its lowest rate since January 2014 (7.3%). Despite a slow in house price growth Halifax report that the level of first time buyers in 2014 reached its highest since 2007, which they attribute to lower mortgage rates and the government’s Help to Buy scheme.

Taylor Wimpey has released a trading update for year-end 31st December 2014. In this update Taylor Wimpey announce that they are entering 2015 with a record order book which has increased in value by 12%, compared to the start of 2014. They are encouraged by the lower rate of price growth which they say will create a healthy and more sustainable housing market.
Source: Competitive Advantage Consultancy Ltd