New work rising in UK

By Sandy Guthrie17 February 2014

New construction work in the UK is rising, according to official figures, but repair and maintenance is not doing as well.

The Office for National Statistics (ONS) has found that a comparison of 2013 annual data with the previous year showed that UK construction industry output was estimated to have risen by 1.3% – £1.49 billion (€1.82 billion).

However, while new work increased during these 12 months by 2.4% – £1.62 billion (€1.98 billion) – there was a slight decrease in repair and maintenance of 0.3% – £140 million (€171.06 million).

The seasonally-adjusted estimate of construction output in the fourth quarter of 2013 rose by 0.2% when compared with the previous quarter. During this period there was an increase in the volume of construction new work of 0.7% but a decrease in the output of repair and maintenance of 0.5%.

The monthly output of construction in December 2013 was estimated to be 2.0% higher than November 2013. The pattern seen in the quarterly data is repeated in the monthly data, with new work showing growth (3.4%) alongside a slight fall in the output of repair and maintenance (0.2%).

The ONS said that estimated annual volume of construction output in 2013 of £112.6 billion (€137.6 billion) was 3.9% greater than the level recorded during the economic downturn in 2009. However, construction output remains 12.2% below its peak of £128.2 billion (€156.6 billion) recorded in 2007.

Slow start

Despite a slow start to the year where construction output fell 1.0% in the first quarter, output was seen to grow steadily throughout the year and it produced three consecutive quarters of growth for the first time since the third quarter of 2010.

When comparing the like-for-like components of the public and private sectors over 2013, a marked difference between the two sectors was noticed by the ONS. During 2013, construction output of new housing, other new work, and housing repair and maintenance showed that public spending on construction had fallen year-on-year by 4.0% – £900 million (€1.1 billion) – while private spending had increased 3.4% – £1.85 billion (€2.26 billion).

The 1.3% annual growth in construction output is almost solely contained within the new housing sector, said the ONS. This sector increased 10.4% – £2.1 billion (€2.57 billion) – year-on-year with a small growth contribution from non-housing repair and maintenance of 0.7%.

The ONS said these increases were in contrast to the decrease in other new work of 0.9% ­– £450 million (€549.9 million) – and housing repair and maintenance which fell 1.3% – £570 million (€696.6 million).

Evidence of recovery

Noble Francis, economics director at the UK’s Construction Products Association said that although the fourth quarter increase had been marginal, it provided further evidence for the continuing recovery in construction.

He said, “Private housing was the key driver of the fourth quarter construction output growth due to wider UK economic recovery and rises in housing demand from government policies such as Help to Buy.

“Infrastructure output also rose in the fourth quarter, by 1.3% compared with the third quarter. However, it still remains 1.4% lower than a year earlier, as previous announcements from government of large capital investment and projects have so far been unable to provide a considerable increase in activity on the ground.”

Noting that repair and maintenance output had fallen, he said, “Although the sector is not high profile, it is still worth £10 billion (€12.2 billion) each quarter and accounts for 37% of total construction. Therefore, the fall in repair and maintenance had a large impact on the overall growth figure for construction.”

Steve McGuckin, UK managing director of the global construction consultancy Turner & Townsend said that 2013 had ended with a bang, not a whimper, “after what began as mere movement turned into real momentum”.

He said, "The first quarter's modest decline was quickly forgotten as the construction industry went on to rack up three successive quarters of growth for the first time since 2010.

"Such steady growth through 2013 has driven confidence back up to pre-crisis levels – and January's purchasing managers survey clocked the highest levels of activity since August 2007.”

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