Construction output suffers biggest quarterly decrease in six years

Construction output in the UK has continued its recent decline falling by 2.7% in March 2018 on a three-month on three-month basis.

Figures published today by the Office for National Statistics (ONS) suggest that the decrease, the biggest fall seen in this series since August 2012, was driven by falls in both repair and maintenance, and new work, which fell 2.8% and 2.6% respectively.

Following several months of consistently strong growth, private housing also experienced a slowdown in March 2018, contracting in the three-month on three-month series by 1.6%.

Construction output also fell in the month-on-month series, contracting by 2.3% in March 2018.

Anecdotal evidence suggests that the adverse weather conditions during February and March could have potentially contributed to the decline in construction output, although it is difficult to quantify the exact impact on the industry, the ONS said.

The estimate for construction growth in Quarter 1 (Jan to Mar) 2018 has been revised up 0.6 percentage points to negative 2.7%, from negative 3.3% in the preliminary estimate of gross domestic product (GDP), which has no impact on quarterly GDP growth to one decimal place.

Responding to the figures, Mark Robinson, Scape Group chief executive, said the industry has a lot of catching up to do if it is to meet targets for this year, whatever the weather.

He said: “Today’s ONS construction data shows that the industry continued to struggle in March, as the unseasonal weather impacted the speed of project delivery and new work commencing. However, we can expect the data to pick up following the CIPS/Markit announcement last week, which shows that activity rebounded in April.

“Over the past decade the UK has benefited from the government’s strong and unwavering commitment to infrastructure investment across the country, and this momentum must continue as we swim in to more austere waters, and edge closer to our exit from the EU. Taking bold decisions now will benefit local communities in the years ahead.

“It is very positive to see that private residential building increased by £6 million on the year – but this growth is still not anywhere near the levels needed to meet housebuilding targets. It is clear that the government needs to think more creatively about housing delivery. A combined effort between the public and private sectors is vital and government needs to equip local authorities with the funding powers to make a real difference in meeting housing need.”

Allan Callaghan

Allan Callaghan, managing director of Cruden Building, added: “While disappointing, these figures come at a period where the housebuilding sector is traditionally at its most productive, with the longer, drier days supporting increased work on the ground. Furthermore, we’re seeing strong demand for modern and affordable housing across the country and I would expect this trend to continue.

“The ongoing skills shortage remains a crucial challenge for this sector. Without skilled labour we cannot increase output to the levels needed to tackle issues such as the housing gap.

“At Cruden we are proactively addressing this and are currently recruiting this year’s intake of around 15 apprentices across a variety of trades and skills through our Cruden Academy. These direct apprentices will become part of our 90 strong team of apprentices that we train every year across the group.”

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