Construction stalls again as skills crisis looms

Latest News Mon, Mar 12, 2018 9:16 AM

Findings from the Office for National Statistics (ONS) have shown that output continued its recent decline in the three-month on three-month series in January 2018, contracting for the ninth consecutive period, falling by 1%.

The ONS attributed the fall predominantly to the continued decline in private commercial work, which fell by 4.1% in January 2018.

Construction output also decreased in the month-on-month series following growth in the final two months of 2017, contracting by 3.4% in January 2018.

Compared with January 2017, construction output decreased by 3.9%, representing the biggest month-on-year decline since March 2013.

Rebecca Larkin, Senior Economist at the Construction Products Association, commented: “After three quarters of decline last year, it appears that 2018 is unlikely to herald a resurgence in industry growth. The fall in activity in January is likely to have been worsened by any pause on projects due to the liquidation of Carillion in the middle of the month. The snow disruption in February and March adds to the downside forces on construction during the opening quarter of the new year.

“The news from the new orders data in 2017 Q4 did little to improve the mood. Although the headline 25.0% quarterly fall was reflective of the spike caused by the award of HS2 contracts in the previous quarter, outside of infrastructure, new orders declined in all sectors, including a 2.3% fall in private housing, which has previously been a strong driver of construction growth.”

New orders decreased by 25% in Quarter 4 (Oct to Dec) 2017 following a record high in the previous quarter, caused by the awarding of several high-value new orders relating to High Speed 2 (HS2).

Despite the fall in Quarter 4 2017, total new orders increased by 4.3% in 2017, reaching the highest total since 2008, at £55,130 million.

Mark Robinson, Scape Group Chief Executive, said: "It is disappointing to see that construction output stalled again in January, as the toxic mix of higher costs, a weaker sterling, and an unsettled economic outlook caused the total value of work to fall to £12.6 billion - down almost 4% on the year.

"However it is important to remember that there remains a very significant need for new schools, housing and infrastructure to meet the demands of the UK's ever expanding population. The Government should use next week's Spring Statement to double-down on investment for growth. Quicker decisions from the Government on more ambitious projects, such as the new Heathrow runway, would go some way to lift the mood in the industry.

"Whilst it is positive to see that housing work remains higher than the same time last year, the drop off over the last couple of months is concerning, particularly in light of the Government's wave of housing announcements. Hopefully Theresa May's promises earlier this week to cut red tape and make the planning process more transparent will help make a U-turn in new housing work over the coming months."

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