Construction output suffers second consecutive quarterly drop

demolition shadow stockOutput in the UK construction industry fell by 1.6% during September to record consecutive quarterly contractions for the first time in five years.

Data published today by the Office for National Statistics (ONS) revealed that construction output contracted by 0.9% in the three months to September 2017.

The fall follows a decline of 0.5% in Quarter 2 (April to June), representing the first consecutive quarter-on-quarter decline in current estimates of construction output since the third quarter in 2012.

The 0.9% decline in output was attributed to decreases in both repair and maintenance, which fell 1.4% and all new work, which fell 0.7%.

Meanwhile the 1.6% month-on-month drop stemmed from falls of 2.1% in repair and maintenance and 1.3% in all new work.

The estimate for construction growth in Quarter 3 2017 has been revised down 0.2 percentage points from negative 0.7% in the preliminary estimate of gross domestic product (GDP), which has no impact on quarterly GDP growth to one decimal place.

Allan Callaghan
Allan Callaghan

Despite the disappointing figures, Allan Callaghan, Managing Director of Cruden Building, told Scottish Construction Now that there is positivity on the horizon.

He said: “At Cruden Building, we are seeing continuing confidence in the housing market, with strong sales across our new housing developments. Similarly, aspiration and demand for affordable housing is also rising from housing associations and local authorities alike in a bid to address the identified housing shortfall. We are currently working on live projects will deliver in excess of 1,300 new homes in the West of Scotland.

“This potential boost in activity has to be viewed against a backdrop of the trailed effects of Brexit creeping in, as large pan-European suppliers to the building industry are warning that material costs could rise by around 15%. This will put construction companies under huge cost pressures to deliver more with less. Clients need to recognise this and address pricing and the industry needs to continue engaging multi-skilled staff to focus on sustainable, steady growth in order to achieve long term success.”

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