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Construction industry returns to growth
Published:  16 September, 2011

The construction industry has seen a 6% year-on-year increase in the value of projects starting on site, according to Glenigan data.

New Glenigan data shows that the construction industry has seen a 6% year-on-year increase in the underlying value of projects starting on site.

Growth in utilities, industrial, office, private and social housing project starts all contributed to the first growth seen by the industry in a year.

"A poor August 2010 signalled the end of the 2010 construction recovery," said Glenigan economist James Abraham. "The construction industry has seen a decline in year-on-year project starts since that time due to public sector cuts and weak private sector investment.

"While the return to growth is a positive sign, it is modest growth from a low base," he added.

The most significant increase was in the utilities sector, which grew by 24% with several renewable energy projects starting on site. These included a £28 million scheme contracted to Solarbright to install photovoltaic panels on around 2,000 council-owned housing properties and five operational properties in Colchester.

Abraham continued: "As reported by the CBI in its August Industrial Trends survey, UK manufacturers are enjoying healthy order books and improving expectations for the future. In line with this increase in sentiment, Glenigan recorded a 15% increase in the underlying value of planning approvals over the six months to July, compared to the same period of 2010."

The decline in private housing which has dominated 2011 bottomed out with modest growth of 1% for the three months to August. Refurbishment projects, including a £50 million project in Kent, continue to drive growth in social housing projects, with 11% growth for the three months to August.

"Newbuild social housing projects will continue to fall due to government cuts, while Glenigan expects private housing starts to stabilise over the coming months," added Abraham.

Regionally the South East and South West saw the most significant growth, with the East Midlands, West Midlands, Yorkshire and Wales all seeing annual growth of over 10%. In stark contrast, the underlying value of project starts in Scotland fell by nearly a third.