Sharp fall in construction starts during August

• Starts in the three months to August were 16% down on a year ago and 17% lower than during the previous three months (seasonally adjusted).
• Residential starts dropped 27% against the preceding three months and were 22% down on a year ago.
• Non-residential project starts were 12% down on a year ago, led by falls in industrial, retail and in government funded areas such as health and education.
• Civil engineering starts declined by 18% against the preceding three months and were 9% down on a year ago.

The value of work starting on site during the three months to August was 17% down on the previous three months on a seasonally adjusted basis and 16% lower than a year earlier, according to the latest Glenigan Index. 

Commenting on this month’s figures, Allan Wilén, Glenigan’s Economics Director, said: “A scarcity of project starts during August has dragged the Index lower. The summer lull in projects starts appears to have been exacerbated by the increased political uncertainty and the prospect of a no-deal Brexit.

“Private housing project starts have fallen back and were sharply down on year ago. A recent rise in private non-residential work was reversed during the three months to August, with renewed falls in industrial, retail and education starts. Civil engineering starts were also down on a year ago due to declines in infrastructure and utilities starts.

“Private residential starts weakened further during the three months to August. Private housing starts dropped 28% during the three months to August against the preceding three months on a seasonally adjusted basis and were 27% down on a year ago. In addition a recent upturn in social housing starts has petered out with starts 25% down on the previous three months to stand 1% down on a year ago.

“Overall non-residential projects slipped 5% against the preceding three months on a seasonally adjusted basis and were 12% lower than a year ago. Industrial and commercial sector starts have weakened over the last three months. Industrial starts were also 27% down on a year ago, while retail and hotel & leisure starts were 25% and 4% lower. Government funded sectors were also lower than a year ago, with education, health and community & amenity down by 12%, 9% and 5% respectively.

“Civil engineering starts fell by 18% against the three months to May on a seasonally adjusted basis and were 9% lower than a year ago. The year-on-year decline in project starts was prompted by a 9% drop in infrastructure projects and an 8% fall in utilities starts.” 

Scotland and Northern Ireland were the best performing parts of the UK during the three months to August, with starts rising by 33% and 37% respectively on a year ago. The East of England also saw a 5% rise in starts. The value of underlying projects starts fell in all other parts of the UK. The East Midlands, London, North East, North West, South East, South West and West Midlands saw double digit declines of 15%, 16%, 37%, 28%, 19%, 37% and 36% respectively.

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