Commercial growth fuels recent surge in construction activity
Expansion in the retail, office and industrial sectors saw construction output increase 15 per cent in the final months of 2013 - despite months of positive data for housing
Industry analysts Glenigan linked commercial growth to a 15 per cent increase in the value of projects starting on site between October and December 2013.
During the period the value of non-residential project starts surged by 21 per cent, marking a second consecutive quarter of growth in non-residential construction starts, for the first time since early 2010.
The increase comes despite the number of UK residential planning approvals shooting up by a third in December compared to last year. Despite the value of social housing project starts being 23 per cent higher year on year, private housing starts actually fell against a strong performance in 2012.
Retail starts during the three months to December were however double the level during the final quarter of 2012, demonstrating the impact of improving consumer confidence last year.
Education project starts also witnessed strong growth last year, increasing by 35 per cent in the final three months compared to the same period in 2012. Education starts for the whole of 2013 were up by 19 per cent following a 14 per cent slump the previous year.
Glenigan economics director Allan Wilén commented: ‘Our expectations for construction activity are positive, in line with the brightening economic outlook. However recent consumer data has underlined the importance of business investment to sustaining a recovery that has been based so far on consumer spending.’
Office construction activity has also continued to strengthen, up by 20 per cent on a year ago, while industrial construction has risen by 15 per cent.
Allan said: ‘Business sentiment remains high and firm occupier and investment demand for new industrial and logistics, office and prime retail space will drive further rises in new starts during 2014.’
Glenigan research during the final quarter of this year showed a broader spread in growth across the UK, albeit from a low base in some areas. Indeed the value of project starts was higher than a year ago in every part of the UK except the east of England.
Project starts in Northern Ireland increased throughout 2013 and during the final quarter were over double the level of a year ago.
Recent months have marked a turnaround in Welsh project starts, with the value of starts during the last three months 29 per cent above a year ago and the outlook for 2014 is for continued growth.