Residential sector leads overall slowdown in project starts while industrial and civils buck trend

• Starts in the three months to September were 15% down on a year ago.
• Residential starts were 26% lower, in large part due to a sharp fall in private housing activity.
• Non-residential project starts were 4% down on the same period in 2016
• Industrial starts up 26% on a year ago.
• Civil engineering starts were 6% lower than a year ago, but up 13% on previous quarter, boosted by increase in infrastructure work.

The value of work starting on site in the three months to September was 15% lower than during the same period a year ago, according to the latest Glenigan Index. On a seasonally adjusted basis, starts were also 20% lower than during second quarter of 2017.

Commenting on this month’s figures, Allan Wilén, Glenigan’s Economics Director, said: “The marked decline in private housing projects starting on site during the third quarter is a concern given the support the sector has recently given to construction starts overall. The level of starts has also been adversely effected by the continued weakness of public sector projects, which have been slow to recover from the disruption and delay of the snap general election. More encouragingly the industrial and hotel & leisure sectors are ahead of a year ago and there are signs of renewed growth in civil engineering activity.

“Private residential starts dropped 33% during the third quarter against both the previous three months and the same period a year ago. The decline follows a strong rise in project starts earlier in the year that had been a major source of support for overall construction starts. The fall comes against a backdrop of a cooling in property transactions in the wider housing market. Social housing starts have been relatively steady, being 7% lower than a year ago.

“Overall non-residential projects were 4% lower than a year ago and on a seasonally adjusted basis were 15% down on the preceding three months. The decline is attributable to falls in office project starts and persistent weakness in public sector funded areas such as health, education and community & amenity projects.  In contrast, while industrial starts were 11% down on the previous three months, they were 26% up on a year ago; a period when many industrial projects were being reviewed during the immediate aftermath of the Brexit vote. Similarly hotel & leisure project starts remain ahead of a year ago.

”Civil engineering starts also strengthened during the third quarter, boosted by a rise in infrastructure work. Starts were 13% higher than during the preceding quarter, although they remained down (6%) on the level seen a year ago.

The north of England and Scotland were among those parts of the country recording increased or stable project starts during the quarter. The value of project starts in Scotland was 9% up on a year earlier, while starts in the North East and Yorkshire & the Humber increased by 3% and 18% respectively. Starts were also higher in the East of England (12% rise) and the South West (7%). In contrast the value of starts in London and the South East were sharply down on a year ago, dropping by 41% and 25% respectively.

ENDS

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

Note: *, underlying projects are valued over £250,000 and under £100 million