The value of work starting on site in the three months to July was 12% down on the same period of a year ago, according to the latest Glenigan Index.
Commenting on this month’s figures, Allan Wilén, Glenigan’s Economics Director, said: “The 12% decline in Glenigan Index covers project starts in the run-up to the EU referendum and its immediate aftermath.
"High levels of political and economic uncertainty during the period prompted many private sector invers to defer investment decisions, contributing to the recorded drop in project starts.
“Non-residential project starts were particularly weak, due to fewer office, hotel & leisure and industrial projects commencing on site. This, combined with a fall in civil engineering project contributed to the overall decline in the index against both the preceding three months and a year ago.
“The three months to July also saw a 10% drop in residential project starts, as a slowing in private sector work combined with weak levels of social housing starts.
“The potential development pipeline remains firm, with the value of projects securing detailed planning approval during the first half of 2016 is 5% up on a year ago. However the strongest growth in approvals have been in those sectors where project starts have been most affected by referendum uncertainty; private housing, industrial and office developments.
“The political outlook has begun to become clearer in recent weeks, following the appointment of the new Prime Minister and cabinet. Nevertheless we anticipate that the uncertain economic and political outlook will continue to disrupt the progress of some projects to work on site. Accordingly, we expect an overall weakening in project starts during the second half of 2016.
Regionally the North East and West Midlands were the only parts of the UK were starts were up on the three months to April. However, there was a more mixed performance against May to July 2015, with the value of underlying starts in the South East, South West, West Midlands and Scotland all ahead of a year ago.
The Glenigan Index of project starts provides a leading indicator of construction activity in the UK. It is based on data collected about every construction project which started on site during the previous three-month period. The Index covers civil engineering, office and commercial projects over £250,000 and more than 10 units for residential property. It excludes any project over £100 million.
