Construction on the back foot as England strike

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The latest ONS statistics for construction output have been released, making tough reading for the industry.

According to the figures, construction output has continued its recent decline in the three-month on three-month series, falling by 1.7% in May 2018. This latest statistic is the third consecutive decline in this series.

A failure of businesses to commit to new work has driven recent falls over the last three reports, figures show that new work has decreased by 2.5% in May.

However, the more volatile month-on-month series is finding positives. Construction output has grown from April’s figures, showing an increase of 2.9%. Growth in the month-on-month series has been driven by a recovery in fortunes for private housing repair and maintenance work, which grew 7.3% in May 2018.

Construction output reached a record high in the final two months of 2017, finishing at 31.5% higher than May 2013 – the low point. With the start of 2018, however, output fell – largely attributed to the terrible weather the ‘Beast from the East’ brought. Output has risen steadily while the weather warms up and has begun to show signs of recovery. Even with a struggling three-on-three monthly series, construction output remains 30.3% above the level seen in May 2013. The month-on-month rise in construction output in May 2018 stemmed from increases across all types of work.

In the three-month series construction output fell by £683M in May 2018. Losses came from private housing new work, which decreased by £394M. Elsewhere, public other new work also fell sharply, decreasing by £238M.

In contrast, the relatively small and volatile private industrial sector continued to provide the most notable positive contribution to growth in the three months to May 2018, increasing by £89M, bolstered by non-housing repair and maintenance, which increased by £65M in May 2018.

Commenting on the new construction output figures published by the ONS today which show output continuing its recent decline, Michael Thirkettle, Chief Executive of leading construction consulting and design agency McBains, said: “Today’s figures make for further depressing reading and show that construction is well and truly mired in the deep waters of recession.

“UK and international companies and investors that are looking to invest in the UK are still struggling to get a read on the post-Brexit destination, meaning a reluctance to commit to new projects.

“In particular, the wages of scarce skilled tradespeople has been rising sharply in recent months and companies will face a further squeeze on labour with the supply of non-UK skilled workers being cut off when the UK leaves the EU – an effect, which coupled with material price increases, is squeezing margins substantially.”

 

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