Construction output

Construction output down 2%

Construction output fell by 2% in November 2017 marking the sixth consecutive period of contraction in the three-month on three-month time series, according to new data.

The latest report from the Office for National Statistics (ONS) revealed that this fall was the largest decrease since August 2012.

However, construction output increased by 0.4% month-on-month in November 2017.

The month-on-month increase in construction output was a result of a 0.5% rise in repair and maintenance, and a 0.4% increase in all new work.

The report also revealed that in the three-month on three-month series new work fell by 2.1%, repair and maintenance declined by 1.7%, while private housing new work increased by 1.2%.

Blane Perrotton, managing director at Naismiths, said Britain’s housebuilding boom was no longer providing a “get out of jail” card for the struggling construction industry.

“At best it’s sugaring an increasingly bitter pill.

“Both commercial property and infrastructure construction suffered a steady loss of momentum during 2017, as investors have continued concerns over the future course of the economy.

“But the seemingly irrepressible buoyancy of the residential sector suggests that the decline in industrial and infrastructure work is likely to be sentiment-led, rather than due to any fundamental weakness in the market.

“Housebuilders continue to bet on future demand from would-be homeowners, and on the front line we’re seeing very brisk residential activity – especially among developers converting office buildings into residential units.

“Not for nothing did last week’s PMI survey reveal that housebuilders have now clocked 16 consecutive months of rising output.

However, Blane said that looking ahead there were other grounds for optimism.

“Rising material costs continue to slice into margins, but construction firms’ order books are filling up well.

“The unresolved question is how much longer the mothballing of commercial and infrastructure projects will continue.

“Few industries are more susceptible to shifts in investor confidence than construction, and if the coming months fail to deliver greater clarity on what the real impact of Brexit might be, the commercial and infrastructure sectors will stagnate further.”

Leave a comment