Construction suffers worst performing quarter for four years

construction-stockThe UK construction sector suffered its worst quarter for four years following the vote to leave the EU, official figures have shown.

The Office for National Statistics (ONS) said today that output in the sector, which accounts for 6 per cent of the UK economy, slipped by 1.1 per cent between July and September quarter when compared to the previous quarter.

The figures were slightly better than its earlier estimate that construction output had fallen 1.4 per cent in the quarter and was a 0.1 per cent increase on same period last year.

Figures for September alone showed a small rise in output of 0.3 per cent compared with August 2016 and a 0.2 per cent increase compared with September 2015.



The ONS said total new housing recorded no growth in the third quarter. But there was better news on infrastructure, which includes projects such as road building and railways, which increased by 1.2%, in the first quarter-on-quarter increase in infrastructure for more than a year.

Commenting on the first full quarter of construction data since the referendum, ONS statistician Kate Davies said small rises in infrastructure and public building work had been offset by large falls in repair and maintenance work, down 3.4 per cent on the quarter. “Construction output has remained broadly flat in the last year, both before and after the recent referendum,” she said.

Allan Callaghan, MD of Cruden Buildings and Renewals Ltd, was also seeking positives from the statistics.

“It’s encouraging to see positive figures shown in today’s ONS report,” he said. “They reflect what we have seen at Cruden – a growing order book and a very productive year of house building across Scotland. Homes at our affordable and energy efficient King’s View development in the south side and Baron’s Vale in the east end of Glasgow in particular have seen very high demand in recent months.



“Housebuilding is a key driver of growth within the construction sector but the skills shortage across the industry remains a pressing issue. The recent announcement that Homes for Scotland and CITB have invested £250,000 in the Professional Skills Fund in a bid to help plug the skills gap is certainly an important step in the right direction.

“We all need to play our part to maintain a steady flow of skilled and talented workers and Cruden is committed to training more than 50 young apprentices every year to help support the future of this important sector.”

Rebecca Larkin, senior economist at the Construction Products Association, added: “Whilst today’s figures show a contraction in construction output, surveys across the industry have painted a more positive picture of continued increases in construction activity during the quarter. This suggests that official data are likely to be revised up further as more data becomes available. Certainly, the ONS data show that new construction work remains the primary driver of activity, rising by 0.3 per cent during the quarter. In contrast, repair and maintenance work was reported to have fallen by 3.6 per cent.

“Despite the contraction in Q3, the rise in new orders in Q2, along with broadly positive expectations expressed in industry surveys, points to a favourable performance over the rest of the year. For the year to date, overall construction output remains 0.6 per cent higher than a year ago.”


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