Construction starts fall, but there is reason for optimism

Glenigan, construction starts

Delays in public-sector projects are highlighted by Glenigan as one of the reasons for construction starts in the three months to July being 10% lower than a year earlier. Non-residential project starts were 15% down on the same period in 2016, led by falls in retail, education and health projects Residential starts were unchanged. However, on a seasonally adjusted basis starts were 6% higher that for the period February to April 2017. Civil-engineering starts were 23% lower than a year earlier.

There were sharp variations in project starts across the country. While most parts of the UK have seen a decline, the value of project starts in the north of England rose by 10%, by 19% in the north west of England and by 8% in Yorkshire and Humber. The sharpest growth was in the east of England, where starts were 60% up on a year earlier.

Allan Wilén, Glenigan’s economics director, said, ‘The year-on-year decline on project starts is in part due to decisions on public-sector projects being temporarily delayed by the snap General Election. We anticipate that these delayed projects will bolster starts over the coming months as work gets underway post-election. Private-sector starts have performed better, although there has been a weakening in a number of areas.’

On a seasonally adjusted basis, non-residential projects were up 7% on the preceding three months.

The health sector saw the sharpest decline, with starts down 59% on a year earlier and against the preceding three months.

There were also double-digit year-on-year declines in the education community and amenity, and retail sectors. These declines were accompanied by a 6% drop in office starts. Industrial starts were also 9% lower. In contrast, there has been strong growth in hotel and leisure work.

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