UK commercial activity hits four and a half-year low

Commercial development activity in the UK declined last month for the first time in four and a half years, according to the latest figures.

The Savills total commercial development activity index - a measure of overall UK development activity - recorded -10.3% last month, compared with +8.4% in October, said Building magazine. It's not been that low since May 2003, confirming the impact of the credit crunch as work on new projects slows, borrowing rates increase and the economic outlook remains uncertain.

It also looks set to become worse in future, with one third of developers surveyed by Savills saying current levels would further decline over the next three months.

The forecast appears to contradict a government report just published. The Department for Business Enterprise and Regulatory Reform's quarterly survey records 6% growth in private commercial construction orders in the three months to October.

The aparrent rise, reported by Contract Journal, could not counter an overall 3% drop in construction orders for the period compared with the same three months last year, however, which was blamed on failing public and private housing sectors. Private sector housing orders plummeted 12% in the the three months to October compared with the same period in 2006.