‘Cautious optimism’ despite biggest annual drop in construction output since 2013

Allan Callaghan
Allan Callaghan

The UK’s construction output fell in November to its biggest annual drop since May 2013, the Office for National Statistics (ONS) said today.

Output in the construction industry was estimated to have decreased by 0.5 per cent in November 2015 compared with the previous month. All new work was the largest contributor to the fall, decreasing by 0.7 per cent, with repair and maintenance (R&M) falling 0.2 per cent.

On an annual basis, output dropped 1.1 per cent.

The ONS said bad weather may have weighed on the construction industry which accounts for around 6 per cent of gross domestic product.

Within new work, there were increases in public other (2.3 per cent), private industrial (1.7 per cent) and total housing (0.9 per cent). However, these were offset by decreases in infrastructure and private commercial work of 4.3 per cent and 1.5 per cent respectively.

Repair and maintenance (R&M) decreased by 0.2 per cent with decreases in both components of housing repair and maintenance; private falling by 1.3 per cent and public by 0.7 per cent. Non-housing repair and maintenance increased by 0.8 per cent.

Compared with November 2014, output in the construction industry decreased by 1.1 per cent. All new work increased by 1.3 per cent while there was a fall of 5.1 per cent in repair and maintenance. The main upwards contribution to all new work came from infrastructure which increased by 11.7 per cent.

Comparing the three months, September 2015 to November 2015, with the previous three months, June 2015 to August 2015, construction output fell by 1.4 per cent. All new work and all repair and maintenance decreased by 1.4 per cent and 1.2 per cent respectively.

When comparing the three months, September 2015 to November 2015, with the same three months a year ago, construction output was estimated to have decreased by 0.1 per cent. All new work increased by 2.4 per cent while repair and maintenance decreased by 4.3 per cent.

The managing director of Cruden Building & Renewals said he remains optimistic despite the dip in the ONS construction statistics.

Allan Callaghan said: “While these figures are perhaps disappointing giving the slight rise in last year’s figures, those operating north of the border will not be too disheartened.

“I have always argued that while these figures are an important marker for sector output and operations, taking a wider viewpoint of the sector as a whole by listening to those on the ground will always be my preferred option.

“There is a real feeling of positivity and confidence from operators north of the border which has been building over the last few months. We ourselves have a wide range of activity across all areas of Scotland, but most notably in the west coast. Demand for our offering remains high and we look forward to bringing a new development to market in the next few months which will go a long way in supporting Glasgow’s housing requirements.

“2016 can be viewed as a real year to change, further diversify and make sure Scotland’s construction offering continues to meet the needs of the Scottish people. I have every confidence that it will.”

Gordon Reid
Gordon Reid

Kier Construction pointed to a bigger picture despite the downturn.

Gordon Reid, business development manager for Kier Construction in Scotland, said: “While it would have been nice to start January with a positive set of figures, you only need to look at the fluctuating pattern of releases over the past few months to see that we shouldn’t be too disheartened. The one constant is the ever-changing nature of the construction sector.

“The positivity and confidence have long been here in Scotland and this year may very well be the 12 months where market requirements and sector offering come together to support consistent growth. All those operating in construction will of course hope that they do, as the sector continues to play its leading role in the economic recovery.

“At Kier, we are greatly looking forward to the year ahead with a number of ongoing projects currently under way and many more in the pipeline, particularly within the education sector. We are delighted to be undertaking additional work with hub South West Scotland on behalf of South, East and North Ayrshire Councils across a number of projects at Marr College, Ayr Academy, Garnock Academy and the East Ayrshire Learning Campus, further illustrating our position as a UK leader across education.

“We will continue to use local knowledge, SMEs and our expertise across the many diverse sectors in which we operate, including healthcare and education, and taking our own successes into consideration, fully expect a greater number of positive ONS figures over the coming months.”

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