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."
