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New construction orders at lowest level since Q1 2014

11 September 2017

Newly-published ONS figures show that construction output in July fell by 0.9% and was 0.4% lower compared with a year earlier.

In addition, new orders in Q2 2017 declined 7.8% and fell 12.6% on an annual basis.

The sectors suffering the largest falls were the industry’s largest three – private housing, commercial and infrastructure.

Commercial new orders began tailing off in the second half of 2016 and are 11.2% lower since the EU Referendum.

Nevertheless, for the year to date, construction output is still 1.3% higher than a year ago.

The weakness in new orders is factored in to the Construction Products Association’s (CPA) forecasts for 2018, with construction growth slowing to 0.7% as activity on projects reaching an end is not replaced at the same rate.

Overall, the quarterly total for orders is at the lowest level since the first quarter of 2014.

Public housing, other public sector construction and the commercial sector were all weak, with the 12-month pipeline for offices being more than 10% down on the year before.

Orders data fluctuates, but there are unmistakeable signs of a slowdown, according to some analysts, particularly in the London market, where the value of orders placed in the second quarter of 2017 is 40% down, quarter on quarter – the worst performance since early 2012. 

Rebecca Larkin, senior economist at the CPA, commented: “Whilst this downward trend was expected amid the rising uncertainty giving way to a reluctance to invest in new offices space, private sector housebuilding and infrastructure are the key drivers of growth in the CPA’s forecasts for 2018 and 2019.

“New orders in these key sectors were the lowest since 2015 and highlight that there are now lower volumes of work queued up in the pipeline.”

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