Civil engineering project starts up 4 per cent on 2008
Social and private housing drive residential project starts up 12 per cent on 2008

The flow of construction projects starting on site in September 2009 stabilised to 4 per cent below levels seen a year ago. This is the third month running that the year on year decline has been stable at 4 per cent. This is a significant improvement compared to the 21 per cent average year on year decline seen between September 2008 and July 2009. However, the Glenigan Index for September 2009 was 81 compared to the 2006 base of 100, showing that while there has been improvement in several sectors and regions, conditions in the construction industry remain challenging.

Regions
The strengthening in public sector building and civil engineering projects has provided a particular boost to the construction industry in Scotland and Northern Ireland. The South West and the North West of England and Wales have also enjoyed a rise in project starts during the three months to September. In contrast, London has seen the sharpest falls in project starts.

Sectors
Civil engineering project starts were 4 per cent higher in September 2009 compared to a year ago as the flow of utilities projects remains strong. The Glenigan Index excludes projects with a value of over £100m. Therefore the civil engineering picture is even more positive when considering large schemes such as the £6.3bn M25 widening scheme.

Residential construction projects starting on site were 12 per cent higher in September 2009 compared to a year ago. This increase has been driven by stronger performance in both private and social housing.

Non-residential construction remains weak, despite an increase in health and community & amenity projects. Continued weakness in commercial and industrial projects plus slight slippage in the flow education projects compared to strong growth since April 2009 all add up to a 14 per cent year on year decline.

Forecast
According to Allan Wilen, economics director, Glenigan, “The pace of decline in the private sector is forecast to moderate over the coming months. However, Government funding cuts will cause the recent strength in public sector project starts to lose momentum.”
Mr Wilen continued, “A gradual recovery is forecast in residential projects thanks to the recent stabilisation in project starts. High vacancy rates and falling rental levels will continue to depress the office, industrial and retail sectors. In addition, after the encouraging pick-up in project starts, the flow of education and health projects schemes is forecast to falter over the coming months. In contrast a renewed strengthening in civil engineering project starts is expected during the remainder of 2009.”

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