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Construction project starts forecast to stabilise in second half of 2009

The June Glenigan Index has revealed that promised government investment has begun to filter through, helping to steady the flow of new projects starting on site after the sharp falls endured over the last year.

The Glenigan Index, which tracks the underlying value of construction projects starting on site, saw the year on year decline in June 2009 ease to 20%. This compares with year on year declines of 30% in recent months.

Increasing public sector projects, primarily in the education, health and social housing sectors are the main areas of support, and are helping to counter sharp falls in the flow of private sector projects.

While most regions have suffered a fall in project starts, Scotland and Northern Ireland bucked the trend. Education projects were the main driver for Northern Ireland. In contrast, the West Midlands, the North East and South West of England have suffered the sharpest falls in projects starting on site.

According to Glenigan economics director Allan Wilén: “Glenigan forecasts that the recent recovery in public sector starts will gather momentum during the second half of 2009. This will drive the overall stabilisation in construction project starts. Growing pressure on Government finances will temper this momentum in the medium term, however.

“We expect the current divergence in between the housing sector to widen over the coming months with an increase in social housing projects contrasting with a depressed private sector development which remains constrained by poor conditions in the wider housing market. The fortunes of non-residential construction will be mixed.

“Civil engineering projects starts will strengthen as new renewable energy, rail and road schemes commence,” he said.

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