Bleak figures for UK

UK construction output in August 2012 is estimated to have been 11.6% lower than in August 2011 at constant (2005) prices, non-seasonally adjusted.

Using the same criteria, comparing the three months from June to August 2012 with the same three months a year ago, the Office for National Statistics (ONS) found that the volume of construction output decreased by 11.9%. New work decreased by 15.6%, and repair and maintenance decreased by 4.2%.

It said that over the same period, the volume of new public housing work decreased by 20.7%; new private housing decreased by 12.1%; new infrastructure decreased by 18.4%; new public non-housing (excluding infrastructure) decreased by 21.9% and private commercial decreased by 14.4%.

According to the ONS, the only sector that increased over this period was new private industrial work, which rose by 1.8%.

David Crosthwaite, an economist for construction and property consultant AECOM, said that the ONS construction output data confirmed what many in the industry already knew only too well.

He said 2012 looked like a very difficult year for construction unless there were to be a significant uplift in the final quarter of the year.

“The only sector showing any positive signs,” he said, “was industrial construction, which saw an increase of almost 2% year on year. However, there were some significant declines in some of the other sectors in particular all public construction and infrastructure.

“Furthermore, examination of historic output data indicates that the period since the third quarter of 2008 exhibits one of the worst construction slumps in a generation. Unfortunately, new orders data suggests the position could get worse unless some stimulus action is taken.”

There was more bad news for the UK construction industry from professional services firm PwC (PricewaterhouseCoopers) which reported that while overall corporate insolvencies had fallen over the past six months, construction and manufacturing remained one of the worst sectors across the board to suffer from insolvencies.

There have been more than 6,000 construction insolvencies since the third quarter of 2010. PwC said, however, that in the third quarter of 2012 (July to September) there had been 4% fewer insolvencies in construction than the previous quarter, and the second quarter was nearly 16% better than the first.

Jonathan Hook, PwC’s engineering and construction leader, said, “While there has been a decline in the number of insolvencies over the last two quarters, the industry remains under severe pricing and cash flow pressure.”

He said he expected further failures in the supply chain over the winter period with the first quarter of next year being the peak point for failures in the sector.