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Office starts up 18% as private sector fuels growth

Private sector project starts have returned to growth in the three months to August, with office starts 18 per cent up year on year.

The Glenigan Index for September revealed that the underlying value of construction starts was down 8 per cent year on year during the three months to August, but private sector starts have returned to growth.

Office starts, excluding schemes valued at over £100m, were 18 per cent higher compared with the same period a year earlier, and hotel and leisure starts saw a rise of 8 per cent.

Industrial starts also experienced a 19 per cent increase.

Fortunes were mixed elsewhere, with retail starts remaining 8 per cent down on a year ago.

This is, however, an improvement on the three months to July, when retail starts fell by 21 per cent.

In contrast, public sector starts were slow to escape the impact of election delays.

A scarcity of public sector projects is continuing to affect new activity, with the value of new education, health and other community starts in the three months to August down on the same time last year.

Non-residential starts have also decreased by 9 per cent.

A number of regional markets saw a decline in starts over the last three months.

Scotland, Wales and, Yorkshire and the Humber were the hardest hit, each seeing project starts fall by at least 25 per cent compared with a year ago.

The East of England and East Midlands, however, experienced the largest growth, with an increase in private housing activity pushing the number of starts upwards.

The West Midlands and the North-east of England also saw an increase in performance over the last year.

Commenting on this month’s figures, Glenigan economic director Allan Wilén said: “The uncertain and hard to call election continued to cast a shadow over the construction industry for much of the summer.

“However, the latest Glenigan starts data shows the commercial and private housing sectors coming back to life, and we expect a similarly strong September to drag starts overall back into growth for the third quarter.

“Private residential project starts also grew at a healthy pace, up 11 per cent on a year earlier.

“Although this growth was also offset by public sector weakness as the downward trend in social housing starts has continued pulling Glenigan’s residential growth index down to -2 per cent.”

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