Construction Output Sees Continued Slowdown

The latest figures for construction output have been published today by the Office for National Statistics.

Construction output continued its recent decline in the three-month on three-month series in January 2018, contracting for the ninth consecutive period, falling by 1%.

The three-month on three-month fall in construction output was driven predominantly by the continued decline in private commercial work, which fell by 4.1% in January 2018.

Construction output also decreased in the month-on-month series following growth in the final two months of 2017, contracting by 3.4% in January 2018.

Compared with January 2017, construction output decreased by 3.9%, representing the biggest month-on-year decline since March 2013.

New orders decreased by 25% in Quarter 4 (Oct to Dec) 2017 following a record high in the previous quarter, caused by the awarding of several high-value new orders relating to the High Speed 2 project.

Despite the fall in Quarter 4 2017, total new orders increased by 4.3% in 2017, reaching the highest total since 2008, at £55,130 million.

Blane Perrotton, managing director of property consultancy and surveyors Naismiths, commented: “After ending 2017 weakly, the construction industry has got off on the wrong foot in 2018 – posting its ninth consecutive quarter of falling output.

“Such a sustained slowdown can no longer be dismissed as a blip. Housebuilders continue to buck the downward trend, but are powerless to reverse it.

“The extra £.25 billion added to the economy by the private housing sector in the last quarter was swamped by the declines in other sectors – with commercial property construction alone contracting by £300m.

“On the face of it, the 25% decline in new orders during the final three months of 2017 is very alarming – but this figure was always going to be skewed by the record high chalked up in the previous quarter.

Brexit Uncertainty
“While the decline is far less acute outside London, the fall in new orders is a stark reminder of how Brexit uncertainty is eroding investor appetite.

“Some notable bright spots remain. Much of the residential sector still has a solid pipeline of work, and the government’s planned shake up of the planning rules could help maintain the turnover of projects.

“2017 saw the highest yearly total of new orders since 2008, but the market’s cautious start to 2018 shows that those two most essential of commodities for developers – confidence and certainty – are now in increasingly short supply.

“And as long as the Brexit melodrama continues, the pattern of intermittent growth and slowdown is likely to hamper the industry’s progress.”

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