Friday, 16 December 2016

UK Construction Market Update - November

Glenigan have published their 2017 Construction Industry Forecast, which shows that expectations for 2017 construction activity has softened during 2016. This is due to economic and political uncertainties. The 2016 JLL and Glenigan UK Commercial Construction Activity Index highlights that construction activity fell sharply following the referendum, yet some sectors remain resilient, particularly hotels and healthcare. CPA has publish a Regional Construction Hotspots Report looking at hotspots of construction activity at a regional and sub-regional level.

This mixed picture is reflected in overall construction figures, with some highlighting a negative impact from Brexit and others showing a more positive outlook.

The Markit/CIPS UK Construction PMI November report shows business activity rising at its fastest rate since March 2016. The Index registered 52.8 in November 2016 an increase from 52.6 in October 2016, signalling an expansion of total business activity for the third month running. Complementing this, latest figures from the Barbour ABI Economic and Construction Market Review, show that in October 2016 all contract activity increased by 5.9% compared to September 2016 and is 18.3% lower that the value recorded for October 2015.

UK Construction PMI - November: 52.8
Figures from the latest Builders Merchants Building Index also show a positive picture. With sales of building materials through UK builders’ merchants remaining strong in Q3 2016, the first three months following the Brexit vote. These figures appear to buck the downward construction trend reported by the ONS earlier in November.

A second survey by the NBS on the impact of the referendum shows predictions for practices’ workloads have markedly improved. In July, only 7% felt their workloads would increase in the coming twelve months. That figure has risen to nearly a quarter.

In contrast a new report from Pilkington, Building Confidence – A future-glazing report for architects and building specifiers, shows that 60 percent of architects and building specifiers have seen Brexit related project delays and almost half believe Brexit will decrease foreign investment in the future.

The Halifax House Price Index reports that in the last 3 months (September-November) house prices were 0.8% higher than the preceding quarter. And in contrast to this the Nationwide House Price Index reported that in November 2016 house prices increased 0.1% compared to October 2016, with annual house price growth slowing to 4.4%.

The latest London Office Crane Survey from Deloitte shows that the amount of office space under development has risen by 4% compared to the previous survey 6 months ago, and is 41% above the 10-year average of 9.7 million square feet. However, the construction periods on some schemes have been extended, with completion dates slipping by an average of one quarter.

Source: Competitive Advantage Consultancy Ltd