UK construction output fell again in the fourth quarter of 2012, with a 9.3% drop compared with the same quarter of 2011, continuing the trend of year-on-year falls started in the third quarter of 2011.

However, the UK’s Office for National Statistics (ONS) said the estimated total volume of construction output in the fourth quarter of 2012 grew by 0.9% compared with the previous quarter.

It said the small rise in the total volume of construction output halted the decline first seen in the third quarter of 2011. The private housing sector (up 5.9%) and infrastructure (up 4.2%) provided the greatest contribution to the increase in the fourth quarter, but were partially offset by decreases in new public non-housing work (down 4.9%) and private housing repair and maintenance, which fell by 4.8%.

ONS figures showed that the estimated volume of all new work grew by 1.6% and repair and maintenance fell by 0.3% compared with the third quarter.

The estimated volume of all new work fell by 11.6% in the fourth quarter compared with the same quarter in 2011, while repair and maintenance fell by 4.7%.

The non-seasonally adjusted output for the fourth quarter showed a somewhat different pattern to previous years, said the ONS, although it admitted the survey had been running for only three years. It said that although December had shown large falls compared with November for all three years, the fall in 2012 was bigger. In addition, output had fallen between September and October in the two previous years but rose by 8.8% this year. Finally, it said, output rose between October and November in the previous two years but fell by 3.1% this year.

Simon Rubinsohn, chief economist at RICS (the Royal Institution of Chartered Surveyors), said, “Construction output in the fourth quarter of last year has been revised upwards modestly from the small increase estimated in the GDP data. This chimes broadly with the results of the latest RICS Construction Survey. The 0.9% rise does, however, follow five consecutive quarterly falls. As a result, the level of construction remains around 17% below the high water mark touched in the early part of 2008.

“Significant headwinds continue to challenge the sector with a lack of finance as well as insufficient demand which is depressing output.”

He added, “Our suspicion is that a more positive trend in infrastructure will help to support the headline construction numbers over the course of this year, but any pick-up in activity will be very limited. As a result, much of the sector will still feel like it remains in recession.”

Steve McGuckin, UK managing director of the global programme management consultancy Turner & Townsend, said, "Only the most resolutely optimistic could see this data as a happy ending to a miserable year for construction.

"Any growth is welcome, but these numbers fall far short of reversing the big drop seen in the third quarter. The year-on-year figures are bleak.”

He said that cuts to public sector spending were biting now, but that there were some rays of light in that levels of new work in the private housing and infrastructure sectors both grew steadily in the fourth quarter.

He said, "We're also seeing the first flickers of confidence returning to some of the banks. Publicly-owned lenders are beginning to make money available for construction projects once again, and this should spur on the industry in 2013.”

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