No improvement in UK

02 December 2011

Forecasts for UK construction output are looking gloomy, with the latest new order figures from the government's Office of National Statistics showing a fall of 5% in the third quarter compared with the same period last year.

New orders in the first nine months of 2011 are 14% lower than in the same period last year.

Michael Ankers, chief executive of the UK's Construction Products Association, said, "Although new orders have improved since the previous quarter, this is still the lowest figure for the third quarter since 1980.

"As expected the fall is sharpest in public sector construction - education, health, and social housing - and although there is some pick up in orders for private sector commercial work, this is heavily focused in London and the south east and is not strong enough to compensate for the sharp decline in orders for public sector work."

Earlier this week, the Chancellor of the Exchequer's autumn statement revealed the government's plan to spend an additional £5 billion (€5.9 billion) on infrastructure.

Mr Ankers said of this prospect of increased investment in infrastructure that the government's figures showed this will not have any significant impact until 2013 at the earliest.

He said that as a result, and in the light of the new orders figures, the industry needed to brace itself for an even sharper fall in output in 2012 than already expected.

Meanwhile, a new report from market intelligence provider Key Note, Building Contracting, discovered that output in the UK construction industry fell by 0.8% between 2006 and 2010.

It said it was worth £117.43 billion in 2010 at current prices, including repair and maintenance work.

Key Note said that private construction bore the majority of losses during the economic crises, with private commercial construction, private housing, and private industrial construction investment all suffering significant losses.

Key Note said it expected construction output to have recovered by 2013. In 2011 and 2012, public spending cuts are expected to offset any recovery experienced within the private sector. By 2013, public-sector spending is expected to have recovered somewhat and significant growth is expected to return in 2014 and 2015, buoyed by public-sector investment in energy infrastructure.

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