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Office starts up 18% as public sector lags behind

The construction industry is starting to move out of its recent stupor, according to figures released by industry analysts Glenigan.

The September Glenigan Index shows that private sector construction starts have returned to growth, though the impact of election delays still hangs over the public sector starts.

Overall the underlying value of construction starts was 8% lower during the three months to August than a year earlier, but this rate has improved from a 20% decline in July.

Taking the month of August alone saw starts up strongly from a year ago.

The office, hotel and leisure and industrial sectors have all returned to growth during the last three months.

The value of underlying office starts, which excludes those on schemes valued at over £100m, was 18% higher than a year earlier, while the hotel and leisure sector saw a rise of 8%.

Retail starts remained 8% down on a year ago; however this an improvement on a 21% fall in the three months to July, with August alone seeing strong levels of new activity.

Industrial starts were also up on a year earlier, rising 19%.

However stasis across the public sector is still weighing on construction starts, and non-residential starts as a whole were down 9% on a year earlier.

The value of new education, health and other community and amenity schemes starting was well down on a year earlier during the three months to August.

Glenigan economics 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.”

“Indeed a scarcity of public sector projects is continuing to weighing on new activity, leaving non-residential starts 9% down on a year earlier during the three months to August.”

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

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