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Project starts see sharpest falls since Q1 2013

Project starts in the three months to April have fallen at the steepest rate since Q1 2013, driven by a dip in office, retail and industrial activity.

The value of projects starting on site in the period declined by 11 per cent year on year, according to the Glenigan Index for May.

The overall dip in non-residential activity was the sharpest seen since December 2009, with the underlying value of project starts 21 per cent lower than a year earlier.

Office starts decreased by 50 per cent year on year, while the retail and industrial sectors fell by 32 per cent and 27 per cent respectively.

Education starts also fell sharply, with the underlying value of starts on university projects plummeting from over £400 million a year ago to under £100 million during the three months to April.

This represents the weakest quarterly total since the end of 2010, and means that the value of education starts was down by 32 per cent relative to a year earlier.

In contrast, the hotel and leisure sector continued to grow, albeit at a slower rate. In the three months to April, the sector saw growth of 11 per cent, down from a 31 per cent increase in the three months to March.

Private housing also recorded growth, rising by 4 per cent in the three months to April, but overall growth in the residential sector was only 1 per cent over the same period, driven by a 6 per cent decline in social housing starts.

Commenting on the data, Allan Wilén, economics director at Glenigan, said: “The pace of expansion in the commercial sectors has eased over the last six months, driven by a combination of a firming comparison base and an easing in investment across the economy during the second half of 2014.

“However the recent sharp decline is a break in this trend, and suggests a wholesale decision to ‘wait-and-see’ by private sector clients and developers.”

He added: “We expect construction starts to spring back during the second half of the year, so long as a credible government is formed and the prospect of a second general election later in the year fades. This would mitigate the impact of the recent slowdown.”

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