Construction project starts for the three months to January 2011 fell by 28 per cent compared to the same period a year ago according to the latest Glenigan Index.

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

Residential projects were 39 per cent down, with private housing falling by 47per cent and social housing by 27 per cent. "Whilst housebuilders 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.

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Non-residential project starts were 23 per cent down. "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," commented Abraham. Glenigan forecast that non-residential construction will grow over the second half of 2011 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 per cent lower than the same period twelve months ago with utilities projects starts now declining faster than infrastructure. "Near term the flow of civil engineering projects is expected to remain weak. However, the Department for Transport's fared relatively well in the Government Spending Review which will support investment in areas such rail. In addition increased investment by regulated utilities and the energy sector will also lift project starts over the longer term," said Abraham.

Yorkshire and the Humber suffered the largest regional fall (49%) with the value of new work starting on site almost half that over the three months to January compared to a year ago. Scotland, Northern Ireland and the North West of England experienced a fall in the value of project starts of 32%, 31% & 34% respectively. The East of England saw a three per cent fall in project starts, the lowest of any region.

(CD/GK)