Strong figures hide gloomy outlook

23 July 2010

The strongest figures for construction output since 2008 hide a more pessimistic outlook, Building warned.

In constant prices, output in the three months to May was as strong as in any quarter since the third quarter of 2008, with contractors both winning more work and doing more work.

After being technically in the second dip of a double-dip recession in the first quarter of this year, the new construction output figures - which provide monthly data – look positive. Meanwhile orders for new work showed growth for four quarters in a row in the period to the first quarter of this year, with housing leading the charge.

However, Building cautioned against an optimistic response pointing to the harsh cuts in public spending which has driven much of the growth in construction activity through the recession.

In the three months to May more public money was spent on construction than in any quarter on record.

Nonetheless, Building pointed to some cause for optimism, with private commercial orders and private housing orders looking strong, which could counter cuts in public spending.

Meanwhile Building reported that up to up to 600 jobs could go in Atkins’ highways and transport division in response to government spending cuts.

Workers at the QS firm were told that job cuts of up to 20% were being considered, in an email reportedly circulated to 2,900 staff this week.

The news comes after WSP announced last week that up to 50 jobs could be cut in its roads business, as consultants prepare for a slowdown in highways work caused by government cuts.

An Atkins spokesperson said that the company was talking to staff in the division.

“We are in discussion with colleagues in our highways and transportation business following anticipated public sector spending cuts on transportation projects,” they said.

“The uncertainty of the impact of UK public spending cuts continues and we are prepared for a period of tighter government spending.

“We continue to work with our clients to understand and work through the impact of any cuts they have to make. It is our policy not to comment on details of individual clients’ contracts or discussions with our colleagues.”

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