Construction sector begins to flatline in February

New research by Glenigan’s has found that Construction sector output began to flatline in February with the value of underlying work starting on-site during the three months to February fell 22% against the preceding three-month period to stand 40% lower than a year ago.

Residential construction starts slipped back 27% on the preceding three months and 43% against the previous year with non-residential project starts fell by 19% against the preceding three months to stand 38% down on a year ago. Whilst ivil engineering work starting on-site declined 8% against the preceding three months, 17% down against the previous year.

Similar to the January and February Indexes, the March edition paints a grim picture of sector-wide decline. The performance continues to falter in Q.1 2023 amid price inflation, economic uncertainty, and lukewarm investor appetite. This is evidenced by a whopping 40% drop in starts compared to 2022 figures and a 22% decline against the preceding three months.

Glenigan’s Economic Director Allan Willen said “Many will be disappointed to see performance levels continue to proceed on their downward trajectory, but given the current economic malaise it’s hardly surprising.”“The year got off on a slow footing, with a further weakening in project starts during the three months to February reflecting the ongoing ripple effect of international conflict, weak economic policy, disrupted supply chains, and rising costs.”

“Consumers and investors are spending thriftily with many holding back until a degree of certainty returns to the economy. This is having a knock-on effect for the construction sector, prompting many contractors to follow suit and ride out the storm before committing shovel to soil.”

“Nevertheless, improved political stability in recent weeks and expectations that interest rates will not rise as significantly as initially feared, combined with promised government investment in large-scale infrastructure projects, will hopefully provide a much-needed shot in the arm to boost performance in Q2 and Q3.”