Civil engineering bucks the trend in new project starts

Despite a marked growth in civil-engineering projects since the beginning of 2009, the Glenigan Index for March shows a 23% year-on-year fall in the number of new construction projects starts. Glenigan forecasts that the construction industry will contract by 30% year-on-year in the first half of 2009. Although the outlook is expected to improve in the latter half of the year, construction activity is thought likely to remain subdued until 2011.

Road and energy sub-sector projects have supported a 39% rise in civil-engineering projects compared to this time last year.

Allan Wilén, economics director at Glenigan, says, ‘The March Glenigan Index is published in the wake of official statistics showing a 2% fall in industry output in 2008, which was weakened by a sharp fall in housing, industrial and commercial work. The short-term outlook for construction remains bleak. The slide in new project starts points to a further marked decline in construction output in 2009.’

Residential projects are down 40% on a year ago and continue to be hampered by limited mortgage availability and falling house prices. Deteriorating economic prospects are expected to prevent recovery in the near term, and this downward trend is thought likely to continue for at least the next two quarters as house builders try to sell existing stock.

Non-residential projects are down by 25% against last year as weak demand, restricted access to finance and a need to contain costs force developers to shelve investment plans. Although new projects starts are expected to continue in the public sector, hotel and leisure industries, the office, industrial and retail sectors are predicted to suffer and the rise in unemployment and cutbacks in consumer spending take hold.

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