By Daniel Hunter

The private housing sector has for the second month running boosted the Glenigan index of project starts in a construction industry that is struggling to find growth.

Even though the overall index declined by 1% the deterioration in total underlying activity would have been far worse if not for the 58% increase in private housing projects nationally compared to the three months to October 2011.

"Private housing has once again been the sector that's stood out from the rest of the industry in a climate where growth is increasingly difficult to find." commented Glenigan Economist Andrew Whiffin. "We believe that the growth in new projects we have seen over the last few months is down to house builders gearing up in anticipation of renewed housing market activity next year."

New private housing projects have been mainly concentrated in the South East and London over the past quarter; however Scotland also saw a large increase in new work especially in October.

"Recent data suggest credit conditions for individual borrowers are improving in a sign that the Bank's Funding for Lending Scheme is beginning to have some positive impact. If mortgage lending picks up going into 2013 construction activity in the sector should continue to improve."

In other news from this month's index the slump in retail activity that began in September has accelerated in October; new projects were down 36% compared to the same period last year. "Retail sector projects have been dominated by the supermarket chains in 2012; their expansion programmes drove growth over the first half of the year and it is the throttling back of these programmes that has led to a slowdown as we head into 2013," commented Whiffin.

The slowdown in public sector new work also continued in October; social housing starts were down 6%, education starts were down 30%, health starts down 32% and community and amenity were down 13%. Government cut backs and a lack of private sector investment incentives will continue to be the main hurdles to project starts across these areas well into 2013.

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