Snap election delays project starts

• Starts in the three months to May were 8% lower than a year ago.
• Non-residential project starts were 17% down on the same period in 2016, due to falls in offices, retail, hotel & leisure, education and community & amenity project.
• Residential starts were 3% lower on a year ago, due to a stabilisation in private housing starts and a decline in social housing projects.
• Civil engineering starts were 13% up than a year ago, driven higher by a sharp rise in utilities work.

The value of work starting on site in the three months to May was 8% lower than during the same period a year ago, according to the latest Glenigan Index. However on a seasonally adjusted basis, starts were 4% higher than during December 2016 to February 2017.

The snap general election appears to have temporarily disrupted the flow of project starting on site, contributing to the decline in the Index during May. Some public sector projects have been delayed by the purdah period in the run-up to 8th June, while a few private sector clients also appear to have deferred decisions on projects until after the election. Glenigan anticipate that starts will pick up over the summer months as delayed projects procced to start in site.

Non-residential projects were 17% down on a year ago. The decline was led by a continued weakening in office and retail projects. In addition there were sharp declines in education and community & amenity projects that may be due in part to announcements on public sector projects being deferred until after the general election. In contrast there has been a further strengthening in industrial building projects starting on site.“Private residential starts for May were unchanged on a year ago. This pause in projects starts follows a strong performance at the start the year and coincides with quieter conditions in the wider housing market.  Social housing starts have slipped back, being 8% down against a year ago.

Civil engineering starts rebounded during the three months to May, being 13% higher than a year ago. The rise in civil engineering starts was driven by a sharp increase in utilities work, which overshadowed a dip in infrastructure projects.”

There were sharp variations in project starts across the country. Whilst most parts of the UK have seen a weakening in project starts, the East of England, North East and North West and West Midlands all enjoyed a marked strengthening in starts, with increases of 22%, 48% and 39% respectively against a year ago. In contrast London, the East Midlands, Northern Ireland and Scotland saw the sharpest declines, with falls of 35%, 24%, 25% and 23% respectively.