News
Glenigan: Weak Finish to a tough year
18/01/2010
Poor weather in the run-up to Christmas added to the construction industry’s problems at the end of a difficult year. The Glenigan Index for December recorded a 9% year-on-year drop in underlying project as a number of scheduled project starts were postponed to the New Year. Near term, the current cold snap will have further delayed projects during January. However, industry prospects are expected to gradually brighten over the course of 2010 as private sector confidence starts to recover, although government funded projects will be increasingly constrained by budgetary restrictions.
Increases in public sector and civil engineering work and a steadier private housing sector have supported the overall flow of construction projects starting on site in recent months. London, the North East and South West of England and the West Midlands have particularly benefited in recent months from the strengthening in public sector building and civil engineering projects. In contrast the earlier boost provided to the project starts in Scotland and Wales faded during the final quarter of 2009.
Near term, a weak private sector is expected to remain a drag on project starts. In addition the current cold snap will have further delayed scheduled projects starts during January. However, looking ahead the flow of private sector work is forecast to improve during 2010. In contrast, the pick-up in public sector starts seen since April 2009 has begun to lose momentum and Government funding cuts will further restrict the flow of public sector schemes over the medium term. Accordingly, whilst underlying construction project starts are off recent lows, the anticipated recovery over the next two years will be slow and fragile.
Weak household earnings and consumer confidence, combined with limited mortgage availability are expected to restrict the pace of recovery in new house sales during 2010. Nevertheless, the pick-up in project starts during the autumn indicates that housebuilders are preparing to capitalise on the anticipated modest improvement in market conditions and a gradual recovery in new residential projects is forecast over the course of this year.
Reproduced from the Glenigan subscriber newlsetter with kind permission. See the full newsletter at http://www.glenigan.com/newsletter2010/jan19th2010_custnews.asp
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