Hotel and Leisure, retail and civils bright spots amid overall drop in construction starts

• Starts in the three months to October were 19% down on a year ago.
• Residential starts were 19% lower, due to a sharp fall in private housing activity and fewer social housing projects.
• Non-residential project starts were 18% down on the same period in 2016
• Hotel & leisure starts rise 10% and retail projects 13% higher than a year ago.
• Civil engineering starts were 18% lower than a year ago, but 23% higher than during the previous three months on as seasonally adjusted basis due to a sharp rise work.

The value of work starting on site in the three months to October was 19% lower than during the same period a year ago, according to the latest Glenigan Index. On a seasonally adjusted basis, starts were also 19% lower than during three months to July 2017.

Commenting on this month’s figures, Allan Wilén, Glenigan’s Economics Director, said: “The marked decline in private housing projects starting on site since the summer is a concern. The sector had been a recent area of support for overall construction starts. The level of starts has also been adversely effected by the continued weakness of public sector projects, a sharp drop of office projects and a recent faltering in industrial sector activity. More encouragingly the retail and hotel & leisure sectors are ahead of a year ago and there are signs of renewed growth in civil engineering activity.

“Private residential starts were 23% lower than during the previous three months on a seasonally adjusted basis and down by a fifth on the same period last year. Private housing project starts have fallen back since the summer following a strong performance earlier in the year. The decline is against a backdrop of a cooling in property transactions in the wider housing market. Social housing starts have also slipped back in recent months, being 14% lower than a year ago.

“Overall non-residential projects were 18% lower than a year ago and on a seasonally adjusted basis were 23% down on the preceding three months. The decline is attributable to a halving in office project starts and persistent weakness in public sector funded areas such as health and education. In addition industrial project starts have faltered over the last three months, slipping back by a third on May to July and being 15% lower than a year ago. In contrast, hotel & leisure project starts are 10% ahead of a year ago and retail project starts are 13% higher than a year ago.

”Civil engineering starts also strengthened during the three months to October, boosted by a sharp rise in infrastructure work. Starts were 23% higher than during the three months to July, although they were 18% down on a year ago.

The value of project starts fell back across the UK, with marked declines in the East of England, East Midlands, North East, London and Wales. Northern Ireland, however, suffered the sharpest decline, being 62% down on a year ago as political gridlock in the assembly delayed publicly funded projects. Scotland and the western half of England fared better. The north west of England saw the smallest (7%) decline in the value of project starts compared to a year ago.

Glenigan Indices (underlying* projects up to £100 million)