UK construction output slows again

Output in the UK construction industry dropped across all sectors year-on-year in January, with an overall non-seasonally adjusted decline of 7.9%, according to the latest figures from the UK Office for National Statistics (ONS).

New work in January decreased 12.7% compared to the three months from November 2012, and repair and maintenance was down 5.3% for the same period. The largest contributor to the decline in output was the private commercial sector, where output fell 14.5% from November last year to January 2013. This is also the largest sector, contributing 22% to total output.

The ONS said the volume of infrastructure work decreased 8.9% between November and January, continuing the decline seen in the last two months, while new public non–housing output dropped 23.5%.

Public housing also decreased 20.4% for the period, but this sector is relatively small, contributing approximately 3% to total construction output.

UK Construction Products Association economics director Noble Francis said poor weather conditions during January was likely to have exacerbated conditions, but couldn’t be blamed entirely.

“The construction output figures illustrate the current state of the industry, where output is now 17% lower than it was just five years ago,” he said.

“Output in the last three months was 11% lower than in the previous three months and 10.2% lower than a year earlier. Furthermore, these latest figures clearly indicate that construction output is likely to fall in the first quarter, worsening conditions for the wider economy.”

Mr Francis said it was crucial that the UK Chancellor focused on delivery of projects, rather than making announcements of forthcoming work.

“Government has made a large number of announcements over the past two years, including £5.5 billion (€6.3 billion) capital investment in the Autumn Statement 2012, in addition to £4.7 billion (€5.4 billion) capital investment and £20 billion (€23 billion) private finance investment for infrastructure in the Autumn Statement 2011.

“However, infrastructure output in the three months to January was 9% lower than a year earlier. With the Budget in less than two weeks, it is critical that the Chancellor focuses on delivery rather than announcements. If this capital investment occurred then it would provide an additional 0.8% GDP growth for the UK economy.”