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.
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 Architects’ Workload survey shows another positive view for construction going forwards. The index rose to +22 in March 2017, an increase from +16 registered in February 2017. And all 4 of the main sectors in the index showed growth for the first time in 2017, highlighting that the private housing sector is still expected to be the strongest performer over the next quarter.
This is further reinforced by the BEIS report showing that the construction material index for all work rose by 5.9% in the year to March 2017 and increased 0.2% on a monthly basis. With construction material prices for new housing, other new work and repair and maintenance rising to 5.9%, 5.6% and 7.1% respectively, in the year to March 2017. The materials reporting the largest price increases were concrete reinforcing bars, fabricated structural steel and imported sawn or planed wood.
The latest CBI Industrial Trends Survey reports that in the 3 months to April 2017 UK manufacturer’s export order books recorded the strongest growth in 6 years and domestic orders had improved at the fastest pace since July 2014. This is despite a weak pound continuing to push up costs as manufacturers report the strongest rise in unit costs for 6 years.
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.
However according to the Bank of England, in March, the number of mortgages approved for house purchase decreased 4.7% on an annual basis and 1.6% on a monthly basis to reach 66,837, the lowest number reported since September 2016. The Halifax House Price Index reports in April 2017 house prices decreased 0.1% compared to March, with annual house prices remaining unchanged from 3.8%. The Nationwide House Price Index reports that in April 2017 house prices were 0.4% lower than March, making this the 2nd consecutive monthly decline. And annual house price growth fell to 2.6%, its weakest pace for nearly 4 years.