Construction site start-ups slide in 2011

Aaron Morby 12 years ago
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Construction got off to a shaky start in January after the number of project starts fell again.

Fresh research on project start-up activity by contract information expert Glenigan delivers a more pessimistic view than other work barometers about the current economic health of the industry at site level.

A  recent survey of construction buyers suggested that construction had bounced back in January, which was seized on by Government as a sign of a broader economic recovery.

But while buyers may be feeling more optimistic after the December freeze that optimism is not finding its way to sites.

Glenigan’s three-month trend figures make dismal reading, even taking into account the adverse impact of the big freeze.

Overall construction project starts for the three months to January fell by 28% compared to the same period a year ago.

Yorkshire and Humberside suffered the largest regional fall with the value of new work starting on site almost half that over the three months to January compared to a year ago.

The value of project starts in Scotland, Northern Ireland and the North West of England were all down a third, while the East of England got off lightly with a marginal 3% fall.

James Abraham, Glenigan economist, said :”The fall in project starts is largely due to the severe December weather. However, while the industry has made up some of the lost ground over the last month, January starts were still much weaker than a year ago.”

Residential projects plunged 39%, with private housing crashing by  47% and social housing down 27%.

“Whilst house builders deferred project starts in recent months in response to poor weather and weak consumer confidence, Glenigan expect private housing developments to return to growth by the end of 2011. In contrast social housing will remain subdued due to Government cuts” said Abraham.

Non-residential project starts were also down by nearly a quarter.

“Retail construction starts halved, having been an industry bright spot throughout 2010.

“Hotel and leisure construction starts fell by a third in the three months to January after defying the harsh December weather to register growth in Q4 of 2010,” said Abraham.

But Glenigan forecasts that non-residential construction will grow over the second half of the year as falling vacancy rates and increasing rental values lift office and industrial construction, offsetting a weakening in government funded areas such as health and education.

Civil engineering project starts were 22 % down compared to a year ago with utilities projects starts now declining faster than infrastructure. Although this is likely to be a short lived hiatus as regulated utilities and energy projects gain momentum.

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