UK at lowest point for 13 years

By Sandy Guthrie09 November 2012

A fall of 11.3% has been recorded by the Office for National Statistics (ONS) for UK construction output in the third quarter of 2012 compared with the same period a year earlier – hitting its lowest point for 13 years.

At constant (2005) prices, seasonally adjusted, the estimated total volume of UK construction output in the third quarter of 2012 fell by 2.6% over the second quarter of the year.

The ONS said the fall in the total volume of construction output continued the decline first seen in the third quarter of 2011. It said the private commercial sector provided the largest contribution to the decline in the third quarter, but that this was offset somewhat by an increase in new infrastructure work.

Widespread falls in the volume of construction output in the third quarter of 2012 compared with the second quarter were reported. There were falls in seven of the nine sectors, with the largest decrease being in private commercial, which fell by 8.2%.

New infrastructure showed the largest quarter-on-quarter increase, with a growth of 9.9%. However, the ONS pointed out that latest quarter-on-quarter growth had not brought the output of this sector back to the levels seen in late 2011.

It estimated that the level of the total volume of construction output in the third quarter of 2012 was the lowest since the second quarter of 1999.

ONS figures showed that the estimated volume of all new work fell by 2.2%, while repair and maintenance fell by 3.2% in the third quarter compared with the second quarter of 2012.

The estimated total volume of construction output in the third quarter of 2012 fell by 11.3% compared with the same quarter in 2011. For all new work, the estimated volume was down 14.5% in the third quarter compared with the same quarter in 2011, while repair and maintenance fell by 4.8% over the same period.

Steve McGuckin, UK managing director of the global programme management consultancy Turner & Townsend, said, "With output tumbling to its lowest level in 13 years, it's almost as if the last decade's construction boom never happened.

"The economy as a whole might be on the road to recovery, but the construction sector is stuck in reverse.”

He pointed out that infrastructure was showing some signs of life, “but it represents just 18% of new work, and the industry as a whole is still walking wounded”.

He went on, "Many in the industry had hoped that if they could just limp through 2012, next year would be better. But with the sector continuing to contract, the optimists are being forced into a drastic rethink.

"With construction slipping from no growth to painful contraction, even stagnation is starting to look attractive."

David Crosthwaite, an economist for construction and property consultant AECOM, said, “The question is what can anyone do to arrest the decline? Both public and private sector seem unwilling or unable to invest in built assets, and until this position changes, I’m afraid it’s likely to be more of the same.”

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