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Civils bucking construction downturn

The construction industry has taken a hammering from the economic downturn, with 35% fewer project starts compared to a year ago, but civil engineering starts are up by 20%.

Economics director at data gathering firm Glenigan Allan Wilén said: “Residential construction projects are expected to deteriorate further over the next two quarters, prospects for non-residential projects are mixed and the outlook for civil engineering is expected to be positive throughout 2009.”

Construction projects starting on site fell 35% year on year according to Glenigan’s April Index. Non-residential and housing project starts led the decline, falling by 39% and 52% respectively.

Civil engineering project starts rose 20% year on year. Civil engineering has had a strong start to 2009 with several road and energy projects starting on site during the first quarter.

The forecast for civil engineering is positive for 2009, driven by new renewable energy projects and spending on rail and road infrastructure.

Overall, second quarter construction starts are forecast to be 25% below a year ago, with construction activity remaining subdued until 2011.

The North of England saw some of the sharpest falls in the value of project starts last year. The first quarter of this year saw the Midlands, the East of England, London and the South East experiencing the largest declines.

Construction starts in Northern Ireland also fell, having held up during 2008. The fall in new building projects points to a further marked decline in construction output during 2009.

In non-residential construction, the industrial, office and retail sectors suffered most as developers have shelved investment plans due to weak demand and credit difficulties. These sectors are forecast to remain weak in 2009, particularly in the second quarter.

Significant falls were also seen in the value of starts in the health, education and community & amenity sectors. Public sector project starts are forecast to be stronger in the second half of 2009.

The decline in residential project starts has been driven by private housing. Social housing schemes are also down on a year ago. Residential prospects are forecast to deteriorate over the next two quarters as housebuilders focus on selling stock and reducing work in progress in the face of worsening UK economic prospects, falling house prices and limited mortgage availability.

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