Ray of light yet to pierce election gloom

Author: ross sturley cimcig

UK construction continues to feel the impact of the general election as activity drops for the fourth consecutive month, according to figures released today by industry analysts Glenigan.

The Glenigan Index for August, which covers the value of projects starting on site during the three months to July, has declined by 27% year on year as the commercial, public, industrial and civil engineering sectors all combined to drag the value of starts lower than a year earlier. The fall was prompted both by decisions on government funded projects being postponed in the immediate run-up to the election and by private developers delaying project starts until the political outlook was clearer.

Private housing saw relatively modest declines during the latest period; starts fell by 8% compared to a year ago, well above the -27% average overall and sufficient to keep the private housing sector in growth mode when viewed over 2015 so far. However a collapse in social housing starts was sufficient to pull Glenigan's residential growth index down to -21%.

Commenting on this month's figures, Allan Wilén, Economics Director at Glenigan, said: "it is a concern that starts have remained weak into July. However, an expanding development pipeline indicates that this appears to be a continued overhang from election related delays, rather than a weakening in client demand.

"Moreover confidence, which radiated out from London across the UK during the course of 2014, remains strong in the English regions, Scotland and Wales."

London and the South East both saw approvals decline during the second quarter, but every other part of Great Britain saw the value of work approved increase during the same period.

Allan Wilén added: "Social housing starts declined by 40% over the last three months, as housing associations digest a new set of challenges to their business and funding models, including a mandated reduction in rent levels and the mooted extension of the right to buy to their tenants.

This will exacerbate what was already a fairly dreary outlook for social housing construction."

The North East saw a positive 13% increase in starts during the three months to July. The South West saw starts decline by a modest 1%; most positive reading for the region since activity began to contract in April of 2014.

However there was no good news for any other of the UK's nations or English regions. London, the South East, the West Midlands, Scotland and Northern Ireland all saw starts at just two thirds or less of the level of a year ago.