ONS figures show a continued decline for construction

Latest News Mon, Jun 11, 2018 1:55 PM

Construction output continued its recent decline in the three-month on three-month series, reports the Office for National Statistics, falling by 3.4% in April 2018; the biggest fall seen in this series since August 2012.

The three-month on three-month decrease in construction output was driven by falls in both repair and maintenance and new work, which fell 3.0% and 3.7% respectively.

Following three consecutive months of contraction in the month-on-month series at the start of 2018, construction output experienced a slight bounceback in April 2018, increasing by 0.5%.

Improvements to the quality and accuracy of regional and sub-sector construction estimates have been made as a result of a methodological improvement, which results in revisions to Tables 5 and 6 of this publication back to 2010. However, in line with the standard National Accounts Revisions Policy, no top-level revisions will be made in this publication. Total construction new orders also decreased in Quarter 1 (Jan to Mar) 2018, falling by 4.6%, driven by the continued fall in all other work new orders.

Rebecca Larkin, Senior Economist at the Construction Products Association, commented: “The 0.5% rise in April reflects an element of catch-up after the combination of Carillion’s liquidation and the bad weather in February and March. This seems like a false positive, however, as output remained weak compared to April last year, with the 3.3% fall equivalent to a £430 million reduction in construction work.

"Only the private housing and industrial sectors recorded growth, the former driven by the traditional spring selling season and the latter due to shorter lead times in factories and warehouses construction.

“The new orders data confirmed an underlying weakness at the start of the year unlikely to be due to the weather. Private housing, industrial and public non-housing new orders increased during Q1, but large falls in the infrastructure and commercial sectors, which account for almost one-third of total construction, are set to act as a drag on growth.”

Mark Robinson, Scape Group Chief Executive, warned that the current uncertainty around Brexit is having a very real impact on the ground.

"There is less appetite for big projects in both the private and public sector and this should be a concern for the Government," he continued. "Sadly, the Government’s failure to provide clarity on its Brexit policy is damaging both the construction industry and the wider economy.

“The need for investment is clear, however, particularly in housing, infrastructure and the NHS, and there is an opportunity for the Government to push ahead with big projects to provide an economic boost that will support SMEs and supply chains in a time of relative uncertainty. If the Government could extend the right of local authorities to borrow to build council housing, this would provide a welcome boost to supply chains at a regional level.”

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