BOURNEMOUTH: An increase in civil engineering work has bolstered the underlying flow of new construction projects, offsetting continued weakness in other sectors, according to the Glenigan Index for November.

Civil engineering project starts were 17% higher than a year ago according to the latest Glenigan Index data for November 2009. The increase was driven by a sharp rise in infrastructure work, in particular rail and national roads projects. New utilities projects remained firm, although slightly down on the strong corresponding period a year ago.

Allan Wilen, economics director, Glenigan said that “Although developers continue to prioritise the completion and sale of properties at existing sites, the increased flow of new private housing projects during the autumn reflects housebuilders’ growing confidence that market conditions will improve during 2010.” Mr Wilen added “Weak household earnings and consumer confidence, combined with limited mortgage availability are expected to restrict the pace of recovery in new house sales and project starts during 2010.”

A marked increase in government funded work only partially offset continued weakness in private sector project starts. The decline in commercial and industrial work is being driven by the weak rental and capital values and rising vacancy rates which continue to deter developers. The rise in public sector work during November has been led by a renewed surge in education projects, supported by increases in health and community and amenity projects.

According to Mr Wilan, “in the short term, high vacancy rates and falling rental levels continue to depress the office, industrial and retail sectors. However, project starts are forecast to recover as economic prospects gradually brighten during 2010. In contrast, the flow of education and health projects is forecast to falter over the coming year as capital budgets are tightened.”

Regionally, London, the North East 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 has receded.