UK dips but long-term growth continues

UK construction fell in November 2013 compared to the previous month, figures from the Office for National Statistics (ONS) show, although the longer-term picture is still seen as showing growth – construction output is estimated to have risen by 2.2% when comparing November 2013 with November 2012.

This is the sixth consecutive month to show an increase on the same month 12 months previously.

The ONS seasonally adjusted estimate of construction output in November 2013 fell by 4.0% – £395 million (€476.8 million) – when compared with October 2013.

Stephen Gifford, director for economics at the CBI (Confederation of British Industry), said, “Although these figures are disappointing, they only reflect one month’s performance and there is a growing sense among firms that the recovery is taking hold.”

Both the new work, and repair and maintenance sectors contributed to the monthly decline in growth, with new work falling 3.9% – £240 million (€289.7 million) – and repair and maintenance dropping 4.2% – £155 million (€187.1 million).

The ONS said that the main reason for the 3.9% month-on-month decline in new work was a 7.1% – £140 million (€169 million) – decrease in private commercial other new work. Within the new work sector, there was also a 3.2% – £50 million (€60.4 million) – fall in private new housing, and a 4.8% – £55 million (€66.4 million) – decrease in infrastructure.

When comparing November 2013 with October 2013, the ONS said there were decreases in all sub-sectors of repair and maintenance contributing to the 4.2% fall. The largest sub-sector, non-housing repair and maintenance, fell 3.9% – £75 million (€90.5 million) – while housing repair and maintenance fell 4.4% – £80 million (€96.6 million).

Comparing the three months of September to November with June to August, construction output grew by 0.7%. There were small increases in new work – 0.8% – and repair and maintenance – 0.6%.

Despite the month-on-month fall in November, the ONS felt the longer-term picture was one of growth, with construction output estimated to have risen by 2.2% in November 2013 compared with November 2012. The 2.2% year-on-year increase in all work was a result of a 3.2% increase in new work and a more modest 0.6% increase in repair and maintenance, it said.

This longer-term growth is supported by comparisons of the three months of September to November with the same period 12 months earlier. All work increased by 5.1%, with new work rising 5.3%, and repair and maintenance increasing by 4.7%.

At the CBI, Gifford said, “Jobs are now being created fairly consistently across the country and, for the first time since the start of the recession, most firms intend to increase their workforce.

“However, as growth picks up, getting more firms investing and exporting is crucial to ensuring a well-balanced, broad-based and sustainable recovery.”

Steve McGuckin, UK managing director of global construction consultancy Turner & Townsend, said, “The industry grew steadily in the second half of 2013, so the news that its momentum faded a touch in November is a surprise rather than a shock.

“Such a modest dip in monthly output is unlikely to interrupt the construction industry's upward trajectory. The 3.2% month-on-month decline in private sector housebuilding comes after stellar performance in preceding months.”

He added, “November’s surprise dip is a minor distraction for a newly confident industry – for most of us, it remains a case of ‘don't panic and keep digging’.”

David Brown, commercial director at LSL Property Services, said, “Urgent and rapid expansion of the construction industry is needed to secure a sustainable housing market. And every indication is that house builders are responding to the challenge, delivering homes almost 40% faster than in the lowest trough of the recession.

“However more still needs to be done. Residential construction has been far too low for at least half a decade.”