Construction industry positive despite drop in output statistics

Brian McQuade
Brian McQuade

Figures from the construction industry have remained upbeat regarding the sector’s future despite statistics pointing to a downturn in output.

The Office for National Statistics (ONS) revealed last week that month on month construction output in April fell 0.8 per cent from the previous month and has so far dropped for three months this year.

However with the year on year figure for output increasing by 1.5 per cent, the overall mood from some industry insiders is remaining positive.

Managing director of Kier Construction’s Scotland & north-east England business, Brian McQuade, is encouraged by a further upturn in industry growth shown in the ONS output report which he said highlights the steady road to recovery that the construction sector is on.

Mr McQuade said: “Within Kier Construction, we are seeing an uplift in the a number of new contracts won and inclusion on more national frameworks - most recently we’ve been appointed to North Lanarkshire Council’s Phase 2 Schools and Centres 21 Design and Build Investment Programme.

“There is clear evidence of returned confidence by public sector clients and private investors alike as they drive forward key construction projects including schools, care homes, hospitals and community centres.”

Allan Callaghan
Allan Callaghan

Allan Callaghan, managing director of Cruden Building & Renewals, added: “It’s encouraging after some recent disappointing results to see a return of slow but steady growth shown in the construction industry and this is certainly in line with the uplift on the number of construction tenders that we are winning on a combination of price and quality. This medium term sustainable growth is key for businesses to have the confidence to continue to invest in skills development, education and life-long learning as we are doing.

“The double-edged sword is that as the sector recovers, the skills gap in the sector widens through trades people leaving the Industry and the shortage of replacements. Cruden has for decades been committed to developing a pipeline of talent and skills from within our business and we currently employ around 50 modern apprentices. However, we recognise that the skills issue is not going away and more needs to be done across the board. As a result, we are committed to growing this figure by recruiting each year a further 30 percent to replace those who have qualified to play our part in tackling this industry-wide problem head on.”

The Construction Products Association (CPA) said new orders point to significant growth going forward.

Dr Noble Francis
Dr Noble Francis

Dr Noble Francis, economics director, said: “Total construction output fell slightly in April but this was expected due to the uncertainty prior to the General Election and its adverse impacts on consumer and business confidence. Specifically, this influenced the kinds of construction work that can be temporarily delayed such as repairs, maintenance and improvements work, which fell 4.8 per cent in April. New construction work was affected to a lesser extent and, despite election uncertainty, private housing output was 4.5 per cent higher than in March and 16.6 per cent higher than one year earlier.

“Overall, construction output was still 1.5 per cent higher than one year earlier and, looking forward, the ONS new orders for construction point to further growth in activity over the next 12-18 months.

“New orders in Q1 were 8.0 per cent higher than one year earlier with orders growth in the three key construction sectors; private housing, infrastructure and commercial. Private housing new orders in Q1 were 1.5 per cent higher than a year earlier, which points to further growth in house building but at a potentially slower rate due to skills and capacity constraints. Infrastructure new orders in Q1 rose by 68.9 per cent as work continues to feed through on major projects in the £466 billion National Infrastructure Plan. New orders in the commercial sector in Q1 rose 14.9 per cent due to a boost from offices and retail projects in Central London, Birmingham and Manchester.”

Dr Francis added: “The CPA has previously highlighted issues regarding the ONS construction output data and we welcome the new construction output price deflators that the ONS has implemented in this data release. As the ONS states, the new price deflators are an interim solution; the CPA will be working with the ONS to ensure that the construction output figures will be as robust as possible in the medium-term.”

Share icon
Share this article: