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UK construction activity continues to fall

Construction continues to feel the impact of the general election as activity drops for the fourth consecutive month, according to figures released by intelligence provider 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.

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 with a year ago, well above the -27% average overall and sufficient to keep the private housing sector in growth when viewed over 2015 so far.

Economics director Allan Wilén 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 the country saw the value of work approved increase during the same period.

Mr Wilén added: “Social housing starts declined by 40% over the past 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 13% increase in starts during the three months to July.

The South West saw starts decline by a modest 1%, the most positive reading for the region since activity began to contract in April 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.

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