GB figures show fall

11 September 2015

Great Britain has seen the first year-on-year fall in construction output since May 2013, with July 2015 figures registering a drop of 0.7% over July 2014.

Figures from the Office for National Statistics found that in July this year, output in the construction industry decreased by 1.0% compared with June, after increasing by 0.9% in June.

Output is defined as the amount charged by construction companies to customers for value of work produced during the reporting period, excluding VAT and payments to sub-contractors.

All new work decreased by 1.5% while all repair and maintenance showed no growth.

Within all new work, there were falls in all work types except infrastructure and private industrial. Public new housing was down 5.8%, private new housing fell 2%, public other new work dropped 4.5%, and private commercial work decreased by 2.9%.

Within the repair and maintenance (R&M) category, the growth in non-housing R&M of 1.4% was found to have been offset by housing R&M which decreased by 1.4%.

Compared with July 2014, output in the construction industry decreased by 0.7% –the first year-on-year fall in construction output since May 2013, when it fell by 2.8%.

‘On course’

Rebecca Larkin, economist at the UK’s Construction Products Association, said, “While it was disappointing to see the first annual decline in construction output since May 2013, we believe the industry is still fundamentally on course for growth over the coming years.

“The declines appear to be led by a weak public housing sector, which is no surprise given the government’s focus on austerity and the resulting decrease in starts.”

She added that although growth in the private housing sector was slightly less than the association would have expected, it remained a strong sector overall.

“Finally, the commercial sector was down 3.2% year-on-year, which may be a result of rising costs leading to project delays.”

She continued, “On the positive side, output for both the infrastructure and industrial sectors was notably robust, up 17.3% and 4.9% on the previous year, respectively. These same sectors are also leading the rise in orders.”

She said that the Construction Products Association’s own surveys, along with many from across the industry, supported its view that the outlook for the industry was positive.

“We forecast growth of 4.9% in 2015 and 4.2% in 2016, and 21.7% growth between 2015 and 2019,” she said.

Lyndon Wood, founder and CEO of specialist trades’ insurance provider, complained that there seemed to be mixed messages from the various surveys and statistics being produced recently.

He said, “Earlier this month we were being told by the Chartered Institute of Purchasing & Supply that the construction sector had seen a rise in output while the Royal Institute of Chartered Surveyors told us that their members had seen an increase in workloads, and then came the news that home completions were up by 15% in England.

“Whatever the statistics, one thing is clear; the housing crisis that the UK is suffering isn’t going to be solved with less builders and tradesmen on the job. We need to keep recruiting new tradesmen and women, and upskilling our construction workers, to cope with the increasing demands on the industry, and to secure its long term future.”

Michael Thirkettle, chief executive of leading interdisciplinary international construction and property consultancy McBains Cooper, said, “There is a chronic housing shortage and although we welcome government plans to build 200,000 new homes by 2020, there is no chance of that number being built unless desperate skills shortages in the industry are addressed.”

He added that restrictive immigration rules were “scuppering” housebuilding targets, as companies could not recruit enough skilled foreign workers, in particular the likes of brickworkers and electricians.

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