Construction output continues upward trajectory despite February dip

Figure 1- Rolling 3 month and monthly all work, February 2017Output in the UK construction sector fell in February with a 7.3% decrease in infrastructure providing one of the main downward pressures, the latest figures reveal.

Sharp falls in infrastructure and as well as new private housing saw UK construction output dip 1.7 per cent in February, its biggest drop in almost a year, according to Office for National Statistics (ONS).

All new work fell by 3.3% in the second month of the year after growing by 0.7% in January.

The fall in all new work was driven by the first month-on-month drop in infrastructure since October 2016, which decreased by 7.3%, and housing, which fell for the second consecutive month by 2.6%.

There was also a fifth consecutive month of negative growth in private industrial other new work, which decreased by 4.7%.

Despite the February decrease, construction output grew by 1.5% in the past three months when compared with the previous quarter, driven mainly by strong growth of 2.2% in infrastructure and 0.6% growth in repair and maintenance.

Brian McQuade, managing director of the Scotland and north-east England arm of Kier’s Construction division, said: “Although figures have dropped this month, the bigger picture points to consistent and strong growth within the industry and we’re now entering the second quarter of the year which traditionally sees an increase in activity. Kier has also announced a solid set of half-year financial results where we have grown our business, expanded our order book and secured a robust pipeline of activity.

“Health and education remain important sectors for Kier Construction Scotland. Recently we have been appointed to work through the development proposals for the £5m Rowanbank secure health unit at Stobhill Hospital through the Health Facilities Scotland Framework for NHS Greater Glasgow and Clyde. We have also been appointed by hub South West to develop the design and build for the new £25m Queen Margaret Academy in Ayr on behalf of South Ayrshire Council.

“There are at least £750m of funded projects coming up for tender across Scotland in the next six months so there are plenty of opportunities available to attract a diverse range of new talent to the industry. We will continue to focus on showcasing the breadth of career opportunities that the construction industry has to offer, and highlight the significant boost that our sector delivers to the Scottish economy.”

Allan Callaghan, managing director of Cruden Homes, said: “This month has shown a significant dip but the overall outlook points to a brighter picture of growth for the fourth consecutive period.  This reflects the results we’re seeing in our own business, where phase one of our Baron’s Vale development in the east end of Glasgow and at our King’s View development in the south side of Glasgow have both sold out months ahead of schedule.  As a result we are bringing forward the phase two launch date at both developments to keep up with this strong market demand.

“Scotland continues to need more homes, both for private buyers and for social housing, and it is important that industry and government continue to work closely together to enable this to happen even faster.

“We are in particular looking forward to seeing the final details on Scottish Government’s updated planning legislation in light of its recent consultation, and hope the revised Bill will enable increased output and other positives for the industry.”

Scottish construction employment reaches three-year high

construction-materials stockEmployment in the Scottish construction industry closed 2016 at 181,000, an annual rise of 7% or 12,000 and the highest number employed within the sector since December 2013.

The newly updated figures have been published by the Office for National Statistics (ONS) following separate figures released last week which showed Scottish building industry output during 2016 was £14.5 billion.

Commenting on the new figures, Scottish Building Federation managing director, Vaughan Hart, said there is reason to believe that employment in the industry can continue to increase.

He said: “Following on from last week’s Scottish construction output figures, these new figures on Scottish building employment during 2016 show a year-on-year rise of 12,000 in the number of people working within the sector.

“Although positive news for the industry, it remains the case that, during 2016, every £1 million of industry output supported 12 Scottish construction jobs. By comparison, in 2007, every £1m of Scottish construction output supported 21 jobs in the sector. This reflects a shift over time in the profile of industry output, away from housing and private commercial activity and towards major infrastructure projects, which provide comparatively fewer employment opportunities.

“With strengthening performance now being seen across housing, private commercial and repair and maintenance, there is reason to hope that industry employment should continue to rise during 2017. At the same time, with so much uncertainty about future economic prospects, we will be watching carefully to see if these positive trends continue in the months ahead.”

Scottish construction output drops slightly to £14.5bn

construction worker stockScotland’s construction industry generated total output of £14.5 billion last year, a modest decline on record output of £14.7bn during 2015, according to new official figures issued today by the Office for National Statistics.

Output from the housing, private commercial and repair and maintenance sectors of the industry were all up year-on-year.

But output from the infrastructure sector of the industry declined from a record high of £4.2bn during 2015 to £3.1bn in 2016.

The Scottish Building Federation said while the figures were “encouraging”, only a reduced reliance on major infrastructure projects would ensure a continued and balanced recovery for the sector.

Scottish Building Federation managing director, Vaughan Hart, said: “There has been encouragingly strong performance from the housing, private commercial and repair and maintenance sectors of the Scottish construction industry last year. Output from the housing sector rose by 16%, largely driven by an increase in private housebuilding. The private commercial sector was also strong, rising 6% to more than £2.6bn, the highest it’s been since 2008.

“We’ve also seen good output in repair and maintenance, rising 5% to more than £4.1bn. On the other side of the equation, infrastructure output has dropped significantly and private industrial activity is at a new low, partly prompted by the removal of empty property rates relief which is a policy we have consistently campaigned against.”

Mr Hart added: “Overall, these are encouraging results which suggest that the industry is moving in the right direction in terms of achieving a balanced recovery across different sectors, hopefully with a reduced reliance on major infrastructure projects to drive future growth as other key sectors such as housing, commercial and repair and maintenance continue to show strengthening performance.

“We will be watching closely to see if this momentum continues into 2017. However, that is obviously very much dependent on how the wider economy performs and there is still a good deal of uncertainty about future economic prospects just now.”

UK-wide construction output fell by 0.4% in January 2017 compared with the previous month although output grew on a 3 month on 3 month basis by 1.8%.

All new work showed signs of flattening out with growth of 0.1% in January 2017, but continued to grow in the latest 3 months compared with the previous 3 months at a rate of 2.1%.

Overall annual construction output growth has increased for 2016, to 2.4% from 1.5%, due to upward revisions for all 4 quarters, including a revision of 0.8% in Quarter 4 (Oct to Dec) 2016, from 0.2% to 1%.

New orders fell by 2.8% in Quarter 4 of 2016, driven mainly by falls in private industrial and private commercial work.

Despite new orders falling in Quarter 4 of 2016, the annual volume of new orders is now at its highest level since 2008.

With Scottish Apprentice Week finishing today, Allan Callaghan, managing director of housebuilder Cruden Homes West, responded to the statistics by urging the sector to continue to keep recruiting and developing young people to build a skilled and talented workforce.

Mr Callaghan said: “It’s encouraging to that annual construction output has increased to 2.4% as this sector continues to play a vital role in supporting Scotland’s economy. However, we can’t ignore the fact the sector is suffering from an ageing workforce with widening skills gaps.

“This week’s Scottish Apprentice Week has put a spotlight on the value of apprenticeships to construction employers. It’s vital that we continue to keep recruiting and developing young people to build a skilled and talented workforce.

“We desperately need to build more new, affordable houses and, with the requirement for over 12,000 new workers over the next five years, there’s never been a better time to encourage young people into this thriving sector.

“Much more than hard hat jobs, it’s a flourishing industry that is home to varied careers including engineering, surveying, marketing, architecture, planning and much more.

“At Cruden, we’re about to begin the process of recruiting 15 new apprentices and they will become part of the 50 strong team of apprentices that we train every year. Employers of all sizes need to play their part in changing perceptions of a career in construction and showcase the variety of roles on offer to attract the next generation of talent.”

Construction sector output shows rise – ONS

construction worker stock

Latest Office for National Statistics data on output in the construction industry have shown a return to growth in output for the industry, in particular from housebuilding.

According to the latest figures, December saw construction output rise by 1.8 per cent compared with the previous month, largely due to an increase in new work.

Private commercial work was one of the main drivers behind construction growth, expanding by 5.2 per cent in December.

Compared with December 2015, construction output increased by 0.6 per cent, the main contribution to this growth came from new housing work.

Brian McQuade

Brian McQuade

Brian McQuade, managing director for Kier Construction Scotland & NE, said: “It’s encouraging to see a rise in output activity in the sector.  Certainly Kier Construction is experiencing steady and sustainable growth as we deliver major build projects across education, healthcare, commercial and retail sectors.  We’ve secured a solid pipeline of activity for the 2017 financial year.

“Although access to skilled labour and rising costs remain industry-wide concerns, there are still opportunities across Scotland, including an extra £800m of capital spending on infrastructure projects that will help Kier and the industry develop tomorrow’s diverse supply chain.  I’m optimistic about the year ahead and we have a number of exciting new projects on the horizon that will ensure our continued steady growth in Scotland through 2017 and beyond.”

Allan Callaghan, managing director of housebuilder Cruden Homes West, said: “The confidence felt within the industry is beginning to match up with market activity and it’s great to see housebuilding emerge as a catalyst for sustainable growth.  At Cruden we’ve had a strong start to the year across our private and public housing developments as modern, affordable homes remains in high demand.Allan Callaghan

“The challenge ahead for the Industry to maintain a sustainable continued growth is the persistent problem of skill shortages, well-articulated in the Farmer Review recently. This is again in the spotlight with the news that 12,000 workers are needed in Scotland over the next few years.

“Apprenticeship and training opportunities will go some way to address this but it’s a big gap to fill.  The industry as a whole needs to get the message out there that the construction sector offers a wealth of varied and rewarding careers.  The industry has proved to be very resilient and the future is looking bright – we just need more young people to realise that.”

Housing up but UK infrastructure work slows

construction worker stockConstruction output in Great Britain fell by 0.2 per cent in November 2016 compared with October 2016, largely due to a contraction in non-housing repair and maintenance, official statistics have shown.

In the latest Office for National Statistics (ONS) construction output report, the three months September to November 2017 show a rise of 1.6 per cent, year on year, with all new work up 4.3 per cent but repair & maintenance down 3.2 per cent.

Over the quarter, private housing was up 12.6 per cent but infrastructure was down 6.1 per cent.

Despite the overall fall in all work during November 2016, new housing continued to grow at an increasing overall rate of 1.2 per cent in comparison with October 2016, representing the biggest increment since February 2016. This has resulted in housing output reaching an all-time high of £2,639 million.

Private sector keeps Scottish construction buoyant after Brexit vote

Kier construction stockOutput from the Scottish construction sector seems to have remained buoyant during the three months immediately following the UK referendum vote to leave the European Union, new official figures suggest.

New figures published today by the Office for National Statistics (ONS) found that output in the Scottish construction sector during the third quarter of 2016 was £3.7 billion, down marginally on the same period in 2015, when total industry output was worth £3.9bn.

However, output from the private housing and private commercial sectors and from repair and maintenance were all up compared to the third quarter of 2015, helping to offset a decline in infrastructure output, down from more than £1bn in Q3 2015 to £722 million during the three months to September this year.

Commenting on the new figures, Scottish Building Federation managing director, Vaughan Hart, said: “These new figures suggest that the Brexit vote has had no immediate effect on the performance of the Scottish construction sector. It’s encouraging to see output from the private sector on the rise compared to the same period last year.

“We anticipated a slowdown in infrastructure activity as major projects such as the Queensferry Crossing draw to a close. More concerning is an ongoing slump in private industrial output with the removal of empty property rates relief having a negative impact on that sector of the industry. Future performance will depend on the wider picture for Scotland’s economy.

“With the Finance Secretary due to present his budget for 2017-18 next week, we will be looking for signs of a further boost to capital spending as a consequence of the commitments made by the Chancellor in his Autumn Statement. That should help to keep the construction sector in reasonable health as we look ahead to 2017.”

In the UK as a whole, construction output was estimated to have decreased in October 2016 by 0.6 per cent compared with September 2016. All new work decreased by 0.9 per cent, with the largest downward contribution coming from infrastructure, while all repair and maintenance showed no growth.

Compared with October 2015, construction output increased by 0.7 per cent. All new work increased by 2.9 per cent with repair and maintenance falling by 3.2 per cent. Within all new work total new housing was the biggest upwards contribution with an increase of 12.6 per cent.

Kier Construction Scotland’s business development manager, Gordon Reid, said: “This month’s ONS stats sees a further drop in output compared to the previous month and there is no doubt that output figures for the construction industry as a whole have been fluctuating throughout the year, but at Kier Construction Scotland, we can look back on 2016 as a good year. Despite political and market uncertainty, we have successfully grown the business, our head count and our order book and secured a strong pipeline of work for next year.

“As well as delivering major build projects across our core sectors of education, healthcare, commercial and retail, 2016 has seen us develop our expertise of working on prestigious heritage projects. Our delivery at the Glasgow School of Art, Edinburgh College of Art and Aberdeen Music Hall, has brought a diverse range of skills to the restoration and refurbishment of these historic buildings.

“Looking ahead to next year, there are plenty of opportunities for the construction sector and the government’s commitment of an additional £800m capital spending for infrastructure projects in Scotland over the next five years delivers what could be viewed as an early Christmas present to this important industry.”

Allan Callaghan, managing director of Cruden Buildings and Renewals, added: “In the midst of what’s been an uncertain year for the construction sector, Cruden has focused on growing organically and delivered a strong set of financial results, totalling 18 years of continuous profit.

“A priority for the industry for the year ahead must be to address the ticking time bomb of skills shortages that prevails right across the sector. Every contractor has a responsibility to help tackle this issue and at Cruden, we are playing our part with our successful modern apprenticeship programme. We have around 50 young apprentices at any one time and this month alone, fifteen young people have just completed their training and we expect to retain the vast majority of them.

“As well as a securing our own pipeline of talent, we have also secured a pipeline of activity for the year ahead. I’m also encouraged by the determination of the Scottish Government to deliver on their pledge to see 50,000 affordable homes being built across Scotland by 2021. So as 2017 approaches, I’m optimistic about the health of the construction sector for the year ahead.”

Construction suffers worst performing quarter for four years

construction-stockThe UK construction sector suffered its worst quarter for four years following the vote to leave the EU, official figures have shown.

The Office for National Statistics (ONS) said today that output in the sector, which accounts for 6 per cent of the UK economy, slipped by 1.1 per cent between July and September quarter when compared to the previous quarter.

The figures were slightly better than its earlier estimate that construction output had fallen 1.4 per cent in the quarter and was a 0.1 per cent increase on same period last year.

Figures for September alone showed a small rise in output of 0.3 per cent compared with August 2016 and a 0.2 per cent increase compared with September 2015.

The ONS said total new housing recorded no growth in the third quarter. But there was better news on infrastructure, which includes projects such as road building and railways, which increased by 1.2%, in the first quarter-on-quarter increase in infrastructure for more than a year.

Commenting on the first full quarter of construction data since the referendum, ONS statistician Kate Davies said small rises in infrastructure and public building work had been offset by large falls in repair and maintenance work, down 3.4 per cent on the quarter. “Construction output has remained broadly flat in the last year, both before and after the recent referendum,” she said.

Allan Callaghan, MD of Cruden Buildings and Renewals Ltd, was also seeking positives from the statistics.

“It’s encouraging to see positive figures shown in today’s ONS report,” he said. “They reflect what we have seen at Cruden – a growing order book and a very productive year of house building across Scotland. Homes at our affordable and energy efficient King’s View development in the south side and Baron’s Vale in the east end of Glasgow in particular have seen very high demand in recent months.

“Housebuilding is a key driver of growth within the construction sector but the skills shortage across the industry remains a pressing issue.  The recent announcement that Homes for Scotland and CITB have invested £250,000 in the Professional Skills Fund in a bid to help plug the skills gap is certainly an important step in the right direction.

“We all need to play our part to maintain a steady flow of skilled and talented workers and Cruden is committed to training more than 50 young apprentices every year to help support the future of this important sector.”

Rebecca Larkin, senior economist at the Construction Products Association, added:  “Whilst today’s figures show a contraction in construction output, surveys across the industry have painted a more positive picture of continued increases in construction activity during the quarter. This suggests that official data are likely to be revised up further as more data becomes available.  Certainly, the ONS data show that new construction work remains the primary driver of activity, rising by 0.3 per cent during the quarter. In contrast, repair and maintenance work was reported to have fallen by 3.6 per cent.

“Despite the contraction in Q3, the rise in new orders in Q2, along with broadly positive expectations expressed in industry surveys, points to a favourable performance over the rest of the year. For the year to date, overall construction output remains 0.6 per cent higher than a year ago.”

Lack of infrastructure activity hits construction output levels

Queensferry Crossing CGIOutput in the UK construction industry suffered an unexpected slide in August led by a decline in infrastructure projects.

Figures published today by the Office for National Statistics (ONS) revealed construction volumes fell by a monthly 1.5 percent in August after a revised increase of 0.5 percent in July. All new work dropped by 1.4 per cent, while repair and maintenance fell 1.5 per cent.

Year-on-year figures also painted a bleak picture for the sector, with construction rising by just 0.2 per cent compared with August 2015, far below consensus forecasts for a 1.2 per cent jump.

A major driver of the slowdown was a drop in infrastructure activity, which fell 5.1 per cent in August following a 6.1 per cent increase the previous month.

Infrastructure was down 9.3 per cent compared to August 2015, which marks the sixth consecutive month of year-on-year decreases, the ONS noted. Infrastructure accounts for projects like roads, water, sewage, electricity and railways.

Gordon Reid, business development manager at Kier Construction Scotland, which recently announced two significant contract wins in the higher education sector, has a more positive outlook on the shape of the construction industry in Scotland.

“Whilst there may be some degree of pause and reflection in some parts of the market, Kier Construction Scotland is not seeing any material slowdown of activity,” he said.

Gordon Reid added: “Kier Construction Scotland was appointed by the University of Edinburgh to carry out refurbishment work on the College of Art. We were also appointed by Glasgow School of Art to deliver the overall renovation of the iconic Mackintosh building, a project which will bring together conservation, craftsmanship and construction skills with modern technology and design innovation.

“With these exciting projects comes the opportunity to attract a diverse range of new talent to the industry.  We continue to focus on showcasing the breadth of career opportunities that the construction industry has to offer, and highlighting the significant boost that our sector delivers to the Scottish economy.”

Similarly, Allan Callaghan, managing director of Cruden Building & Renewals, remained pragmatic regarding the statistics.

He said: “While disappointing, these latest figures come as no surprise following a period of political and economic uncertainly coupled with a rise in material costs.

“Yet despite these challenges, our order book has continued to grow, supported by our mixed offering and investment in staff and training. Our annual results released this week highlighted our seventeenth consecutive year of profitable trading which, together with our flexible business model and positive cash position, will support activity over the coming months and allow us to take advantage of opportunities when they arise.

“I’m confident that those in the construction sector will continue to weather the storm and Cruden in particular will continue our steady and sustainable growth over the coming months and into 2017.”

Construction output remained ‘steady’ in month following Brexit

Miller Homes stockThe UK construction industry output held “steady” during the first full month after June’s Brexit vote with new orders and house building also increasing on the previous quarter, new figures have revealed.

After a 1.0 per cent drop in the sixth month of the year, construction output in July was unchanged with “little evidence to suggest that the referendum has had an impact”, according to the latest data released by the Office for National Statistics (ONS)

All new work increased by 0.5 per cent while all repair and maintenance decreased by 1.1 per cent.

Compared with July 2015, construction output decreased by 1.5 per cent. All new work, and repair and maintenance decreased by 0.6 per cent and 3.2 per cent respectively.

The underlying pattern as suggested by the three month on three month movement in output in the construction industry decreased by 1.2 per cent.

New orders were estimated to have increased by 8.6 per cent in quarter two (Apr to June) compared with the first three months of the year and increased by 7.5 per cent when compared with last year’s second quarter. New housing also increased by 25.0 per cent while there was a fall of 17.4 per cent in infrastructure.

There was an upwards revision of 0.6 percentage points to construction output in the second quarter of the year to -0.1 per cent, this has no impact on GDP to one decimal place.

ONS statistician Nick Vaughan said: “Construction output remained steady in July with growth in infrastructure offset by falls in repair work and commercial buildings.

“There was strong growth in construction orders, led by housing, after nearly two years if orders remaining relatively flat.”

Encouraged by the industry growth, Allan Callaghan, managing director of Cruden Building & Renewals, said: “These positive figures illustrate the ongoing strength and resilience of the construction sector in the face of a challenging, post-Brexit environment. While this stablisation in the latest ONS statistical release will be warmly welcomed, all those operating within the construction industry know that they can change on a monthly basis.”

UK construction sector continues output decline

office_for_national_statisticsThe UK construction industry has continued to decline though the full impact of the EU referendum result may yet still be to come, according to the Office for National Statistics (ONS).

Figures published by the independent body today revealed that output in the sector decreased by 0.9 per cent in June 2016 compared with May, continuing a monthly decrease since the start of the year.

In Quarter 2 (Apr to June) 2016, output was estimated to have decreased by 0.7 per cent compared with the first quarter of the year and decreased by 1.4 per cent compared with the same period in 2015.

The decline left the industry 2.2 per cent smaller than it was last year.

In June, work fell in nearly all sections of the industry, with only public housebuilding and private industrial work managing to grow. The other components – repair and maintenance work, infrastructure, and private housebuilding – all declined.

The ONS cautioned against blaming the slowdown as a direct result of Brexit though analysts warned that the slowdown needs to be reversed to build the amount of homes needed in the UK.

The ONS said: “There is very little anecdotal evidence at present to suggest that the referendum has had an impact on output.”

Andrew Bridges, managing director of Stirling Ackroyd, added, “There’s been a dip in total new housing work – but housing remains a stable and reliable source of construction work. Brexit may not have put developers off building yet but this slow down needs to be reversed if enough new homes are to be built over the next few years.”

A recent survey from Markit/CIPS suggested the construction industry suffered its sharpest downturn in seven years last month.

Allan Callaghan, managing director of Cruden Building & Renewals, remained cautiously optimistic despite the output statistics.

He said: “While these figures will cause disappointment throughout the Scottish construction sector, they will come as no surprise to those on the ground. They do however follow welcome news this week with the Scottish Government’s attempt to stimulate the economy by making an additional £100 million available for infrastructure projects, a move welcomed by the industry.

“As we face what is expected to be a period of uncertainty compounded by economic challenges, alongside an anticipated rise in material costs and the fall of Sterling, we may well see further reductions in the coming months.

“But this is no worse than what the sector has faced in previous years and at Cruden, we face the headwinds and economic challenges face on. While price increases in materials like brick and timber will cause undoubted challenges, it will not hinder our development plans.”

Allan added: “While operating in difficult circumstances it would be easy to bury your head in the sand and wait it out, but we are committed to supporting and growing Scotland’s construction sector and will continue to provide quality developments and local employment and training opportunities, helping to support future ONS figures.”