A construction output report has revealed that the value of underlying work commencing on-site has fallen 15% in the three months to January 2022 against the previous three months (August-October 2021).

Construction intelligent experts Glenigan released the February 2022 edition of its Construction Index. The report focuses on January 2022, covering all projects with a total value of £100 million or less (unless otherwise indicated), with all figures seasonally adjusted.

The report provides a detailed and comprehensive analysis of year-on-year construction data, giving built environment professionals a unique insight into sector performance over the last 12 months.

Persistent decline

According to the report, the downward curve registered throughout autumn/winter 2021 persisted into 2022, with the value of on-site work plummeting by 15% in the three months to January. This is down 31% compared to the previous year.

This brings project starts to a significant low, revealing an ‘abnormally weak’ January, with start value being at its lowest since the first national lockdown in spring 2020.

Persistent labour and supply chain issues are still having a negative effect on output, holding back recovery and proving a primary reason for such poor performance, Glenigan says.

This has been further exacerbated by rising material prices and deteriorating economic prospects, urging some clients and developers to review project costings or viability and delaying starts on site.

However, despite disappointing levels of output, this month’s Index has recorded a strong development pipeline. This offers a positive outlook for the rest of the year, should external events and challenges resolve.

Sector specific: residential construction

Similar to January’s Index’s data, the value of residential work commencing on-site during the three months to January fell 45% against the previous year, and 20% compared to the preceding three months.

Although social housing project starts increased 3% on the preceding three months, the value fell 30% against the previous year.

Private housing was the worst-performing sector during the period, with starts falling by nearly half (49%) against the previous year and nearly a third (28%) compared with the preceding three months.

Sector specific: non-residential construction

Non-residential sector performance was mixed. Industrial starts – consistently the strongest performer over Q4 of 2021 – declined 18% in January against the preceding three months, but rose 44% on the previous year.

Hotel and leisure was the only sector to experience growth against both the previous year (23%) and the preceding three months (35%).

Other sectors continued their downward trajectory, with office starts falling 36% against the previous year and 37% against the preceding three months. A similar picture was painted in retail and health, down 17% and 21% against 2021 respectively, and dipping 8% and 14% on the previous three months.

Once again, civils work fell against the previous year (24%) and the previous three months (7%). Utilities fared even worse with a 36% dive on last year and 26% on the previous three-month period.

Regional analysis

Wales stood out as the only area of the UK to see growth against the previous year (29%) and on the preceding three months (34%).

Although Scotland (-31%) and the South West (-27%) were down on last year, they both saw an increase on the preceding three months by 2% and 11% respectively.

The majority of regions experienced heavy declines during the three months to January. Most dramatically, project starts in the West Midlands fell 64% against the previous year as well as 42% against the preceding three-month period.

Similarly, poor figures were registered in the East of England (-43%) and London (-34%), which experienced very sharp declines in work commencing on-site against the same period in the previous year.

Commenting on the Index, Rhys Gadsby, Glenigan’s senior economist, says: “Many will be disappointed the year hasn’t got off to a more positive start, but I would suggest a degree of optimism is in order.”

“We are starting to see some of the socio-economic challenges gradually easing and this is being evidenced through a growing pipeline of planning approvals and main contract awards, as highlighted in our January Construction Review, published last month.”