UK construction sector continues output decline
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.”