The latest Glenigan Index for the construction sector indicates that project starts are beginning to stabilise, with levels holding steady during the three months to the end of October 2024. While the residential and non-residential sectors have experienced modest gains, civils work has seen a decline. This marks a shift from the more turbulent months earlier in the year, offering some relief across the construction supply chain.
In the residential sector, overall project starts have seen a slight 1% increase compared to the previous quarter, though they remain 8% down on last year. Private housing has shown resilience, with project starts on-site remaining steady compared to the same period in 2023. Social housing, however, has seen a dramatic 32% decline when compared to last year, highlighting the ongoing challenges in the sector.
The non-residential sector has also experienced a mixed performance. While hotel and leisure projects surged by 50% over the past three months and nearly doubled compared to the previous year, other areas such as retail and education have seen declines. The health sector showed growth, with starts rising by 8% over the last quarter, though it remains 8% below last year.
Interestingly, industrial starts have stabilised, showing a 21% increase when compared to a weaker performance last year. This suggests that the industrial sector is on the road to recovery, albeit at a modest pace.
Civil engineering has experienced a drop of 8% in project starts compared to the preceding quarter, although it remains 1% up on the previous year. Infrastructure projects, however, are seeing positive growth, driven by the rising demand for large-scale infrastructure projects. The utilities sector, on the other hand, saw a decline of 6%.
Regionally, the West Midlands has been a standout performer, with project starts up by 28% compared to the previous quarter, although still down 17% on the previous year. The South East, South West, and East of England have all posted solid growth, with starts up by 16%, 10%, and 21%, respectively.
Scotland also saw an increase of 6% over the previous three months, though it remains 14% down on the previous year. Conversely, regions such as the East Midlands, Yorkshire & Humber, and Wales have seen declines, with Yorkshire & Humber and Wales both suffering drops against both the preceding quarter and last year.
For contractors, the stabilisation of project starts across both residential and non-residential sectors offers a glimmer of optimism. While the growth is modest, it suggests that demand for construction services is holding steady, providing an opportunity to plan for the future. However, the downturn in civils and the challenges in social housing signal that contractors will need to be agile, diversifying their portfolios to weather the fluctuations in the market.
For system manufacturers, including those involved in fencing, this trend reinforces the need for high-quality, resilient products that can withstand the challenges posed by both the environment and changing market demands. The rising demand for infrastructure and industrial projects suggests an opportunity for manufacturers who can offer specialised solutions, particularly in areas such as high-security fencing, where the demand for durable, reliable products continues to grow.
As the market adjusts, manufacturers and contractors alike should remain proactive in understanding the shifting demands of the market. While the modest growth across several sectors is promising, it will be essential to keep a close eye on policy changes, particularly in the wake of the Chancellor’s recent budget. This could provide a much-needed boost, particularly in sectors such as infrastructure, industrial housing, and education.
Commentary:
The overall picture presented by the Glenigan Index offers a mixed outlook for the construction industry. While there are signs of recovery in certain sectors, challenges remain, particularly in civils and social housing. This means that both contractors and system manufacturers need to remain adaptable, ready to pivot as market demands evolve. For fencing manufacturers like Siddall and Hilton, the focus should be on providing innovative, high-quality solutions that address the specific needs of each sector. This is a time for agility and strategic investment to ensure that products meet the emerging needs of a stabilising construction market.
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