Construction back in decline

The underlying value of construction projects starting on site in the three months to April fell 4% year on year, according to new data from Glenigan.

James Abraham, economist, Glenigan, commented: "This is the largest year on year decline in the Index since the 5% fall in May 2011.

“Residential construction was flat year on year for the three month to April.”The 15% increase in private housing project starts was met by a 17% decline in social housing activity as private sector growth failed to outpace public sector cuts.

"There was a similar pattern of private sector growth versus public sector cuts in non-residential construction. Office and industrial building is responding to a shortage in supply following three years of limited building and supermarket investment remains high. However, the health, education and community & amenity all fell, as public sector cuts continue to bite."

According to the Glenigan Index forecast the underlying value of construction projects starting on site will remain below that seen in quarter one of this year into 2014.

"The recent pattern of activity is expected to continue throughout 2012. Investment in infrastructure and private sector building recovery will be offset as Government cuts restrict health, education and social housing projects. Less money for new builds could see an increase in refurbishment work this year" said Abraham.

He concluded: "More growth is predicted for the commercial sectors, though a sustained rise depends on general economic prospects. The increase in private housing building seen over the first third of the year will slow over the next six months."