Thursday, 18 May 2017

UK Construction Market Update - April

The ONS have released their Construction Output in Great Britain: March 2017 and January to March 2017 figures, showing that construction grew for the 5th consecutive period on a 3 month on 3 month basis, rising by 0.2% for Q1 2017. Supporting this positive view the Glenigan Index April 2017 shows the value of work starting on site in the 3 months to April was 6% higher than during the same period a year ago, offsetting earlier weakness at the end of 2016.

Markit/CIPS UK Construction PMI April 2017 shows construction activity growth picking up in April 2017, mainly driven by work on civil engineering projects. The Index registered 53.1 in April 2017, a slight increase from 52.2 in March 2017, signalling the sharpest rise in total construction output of 2017 so far.

UK Construction PMI - April: 53.1
The April Economic & Construction Market Review from Barbour ABI, shows all construction activity increased in March 2017 as new contracts awarded increased by 1.1% compared to February 2017. Yet Barbour ABI reports this month that the value of new contracts commissioned in April decreased by 16 per cent when compared to March. It goes on to warn £5.4 billion worth of construction contracts were commissioned in April, lower than in any month across all of 2016.

The CPA’s Construction Trade Survey also reports a strong start to 2017, with SME builders, civil engineering firms, product manufactures and specialist contractors all reporting increases in sales, output and workloads in Q1. However the industrial and commercial sectors showed a decrease in activity, with 31% of main building contractors reporting a drop in activity in the first quarter of 2017, compared to a year ago.

The latest statistics from The NHBC shows a strong start to 2017 for new home registrations as more than 42,000 new homes were registered in the first 3 months of 2017. This is an increase of 17% on the 36,351 registered 12 months ago, making this the highest quarter in 10 years. Complementing this, the latest HBF/Glenigan Housing Pipeline survey shows that the number of new home planning permissions continues to rise, with permission for 293,127 new homes granted in 2016. This is the highest yearly total recorded since the report began in 2006. While the numbers are a strong indicator of future supply, the report also shows that an increase in smaller sites is needed to help tackle the country’s housing shortage.

Recent Glenigan data shows that the value of projects securing planning consent during the first 4 months of 2017 was up 16% on the same period a year ago. This data shows construction industry has a fast-growing pipeline of residential and non-residential projects which promise to sustain industry activity over the next year. Residential will be further boosted, as the Mayor of London has announced an £8bn partnership with one of London’s largest housing associations to build 20,000 new homes, of which 12,000 will be affordable homes.

Source: Competitive Advantage Consultancy Ltd