Construction output falls 2.1%

Construction output falls 2.1%

The latest Office for National Statistics data revealed output fell 1.9 per cent year on year in May and 2.1 per cent compared with April. In the period from March to May, output was down 1.7 per cent compared with the same time a year ago.

Both all new work and repair and maintenance output declined month on month, falling by 2.6 per cent and 1.4 per cent respectively, compared with April 2016.

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Rob Domeney, head of the Manchester office of consultant RSK Group, said: “Although some developers in the North-west are looking to reassess their land purchase and development decisions, most report business as usual – although we need to monitor if any low levels of uncertainty translate into a wider reluctance in the construction industry to commit to new projects, which would pose a risk to the ambitions of a Northern Powerhouse.”

Stirling Ackroyd managing director Andrew Bridges said: “Housing has typically been one of the most reliable areas within construction.

“Demand is consistent and people are crying out for new homes, not just in London but across the whole of the UK. Uncertainty about Brexit has placed extra strain on the industry recently, placing overseas deals in doubt and the sector’s workforce on the line.

“Now the vote has been decided, it’s crucial action is taken to bolster the sector. The laying of cement and bricks is slowing – and a new momentum is needed. Planning is an extra drag. Just 61 per cent of new homes were allowed by London borough councils in Q1 2016 and if that carries on London’s housing deficit will worsen even further.”

Markit chief economist Chris Williamson said: “A drop in UK construction output in May adds to what’s looking like an ugly run of data for the sector. Construction output fell 2.1 per cent in May, which would be an alarming rate of decline had the sector not seen a 2.8 per cent increase in April.

“However, it looks like there’s worse to come – possibly much worse. Markit / CIPS PMI survey data recorded the steepest contraction of construction activity for seven years in June as projects were put on hold in the lead up to the EU referendum. Housing and commercial construction were especially badly affected.”

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Construction output falls 2.1%
BDC October 2022 issue - 297

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