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Construction output rises but new orders keep falling

10 July 2018 | By Neil Gerrard

Construction output has increased month-on-month but new orders continued to fall, according to the latest official figures.

Output was up by 2.9% in May compared to the previous month, Office for National Statistics research showed. This was the fastest monthly growth in two years thanks to an uptick in activity following adverse weather in the first quarter.

The ONS also attributed the growth in output to the recovery of private housing repair and maintenance work, which grew 7.3% in May, following a weak start to the year, the ONS said.

Compared to a year earlier, output rose 1.6%, but contracted by 1.7% on a rolling three-month basis.

However, new work fell in May by 2.5%, making it the third consecutive month that new orders have declined.

Rebecca Larkin, senior economist at the Construction Products Association, said: "The construction industry appears to have caught up with some of the work lost in February and March due to the freezing ground conditions and snow disruption. Month-on-month gains were evident across all sectors, but were strongest in private housing repairs, maintenance and improvement (RM&I), the third largest construction sector, due to warmer weather and longer days.  

"Private housing new build was 8.4% higher than a year earlier, which points to strength in activity beyond basic catch-up as the industry enters the busier spring and summer selling season. However, for the year to date overall construction output remains 0.3% lower than a year earlier, with particular weakness in public non-housing (mainly education and health) and commercial, where a significant fall in new orders signals smaller pipelines of work."

Blane Perrotton, managing director of the national property consultancy and surveyors Naismiths, added: "New orders in the construction industry are like potential World Cup winners – they’re getting fewer and fewer.

"Across the country, demand is patchy at best. While we’re still seeing real momentum in the North West and West Midlands, it’s a different story in London and much of the South East, where developers are pausing on new projects and concentrating on finishing existing ones."

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