UK output falls in May

By Sandy Guthrie10 July 2015

May 2015 saw a fall of 1.3% in UK construction output over April’s figure, with all new work, and repair and maintenance both contributing to the decrease, according to the latest figures from the Office for National Statistics (ONS).

Compared with May 2014, though, output – defined as the amount charged by construction companies to customers for value of work (produced during the reporting period) excluding VAT and payments to sub-contractors ­– showed an increase of 1.3%.

Meanwhile, The UK’s Construction Products Association’s latest State of Trade Survey, for the second quarter of 2015, indicated that construction product manufacturers’ sales had increased for a ninth consecutive quarter, driven by growth in all key areas of the UK construction market, together with a rise in export demand.

The ONS figures showed that in May 2015, output in the construction industry was estimated to have fallen by 1.3% compared with the previous month.

All new work decreased by 1.5%, with all types of new work except infrastructure reporting decreases. Total housing reported the largest fall, 5.8%, with smaller falls from private industrial (3.3%), public other (1.4%) and private commercial (0.3%).

Repair and maintenance (R&M) decreased by 1.0%. Falls in non-housing R&M (down 1.9%) and private housing R&M (0.8%) were offset slightly by public housing R&M, which increased by 1.8%.

Compared with May 2014, the construction industry output increase of 1.3% included all new work rising by 3.2% while R&M decreased by 1.7%.

Comparing the three months of March to May 2015 with the previous three months, December 2014 to February 2015, construction output fell by 0.4%.

In this period, all new work decreased by 1.7% while R&M increased by 1.8%.

When comparing March to May 2015 with the same three months a year before, construction output was estimated to have increased by 2.7%, with all new work increasing by 4.2%, and repair and maintenance by 0.3%.

Second quarter rise

The Construction Products Association’s State of Trade Survey for the second quarter of 2015 revealed that a balance of 78% of heavy side firms and 73% of light side firms reported that sales rose during the quarter, compared to a year earlier.

It found that 78% of heavy side product manufacturers and 50% of light side product manufacturers reported that they expected a rise in sales over the coming year.

Exports increased for 20% of heavy side firms and 40% of light side firms, said the Construction Products Association, with 23% of heavy side firms and 38% of light side firms forecasting a rise in exports over the next year.

Construction Products Association economist Rebecca Larkin said, “The construction recovery has broadened beyond private house building to the commercial, industrial and infrastructure sectors, which has increased demand for construction products and led to a sustained period of growth among manufacturers.

“In contrast to the first quarter, which saw a decline in export sales, domestic strength was also boosted by an increase in sales to overseas markets.”

She said that manufacturers predicted that this dual source of rising demand would continue to drive sales over the next 12 months.

She added that reinforcing optimism over the outlook and indicating that manufacturers expected a sustained increase in production, two-thirds of heavy side firms reported that investment in plant and equipment increased in the second quarter compared to a year earlier, and was cited as the primary area of investment for the next 12 months.

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