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

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.

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 and leisure sectors [13% up and 10% up respectively] 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,” Allan said.

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.