Industry observers have given a mixed response to the latest figures on construction output and new orders from the Office of National Statistics (ONS).
The ONS bulletin reported that seasonally adjusted construction output rose by 1.2%, or £113m, in April 2014, compared to the previous month, and by 4.9% compared to the same month last year, due to increases in new housing, private industrial and repair and maintenance categories.
The ONS then revised up its previous estimate of construction growth for Q1 2014 to 1.5%, due to the inclusion of late survey data for March 2014, and said that this revision could mean an upwards recalculation in overall UK GDP growth for the quarter by 0.1% to 0.9%.
But less optimistic were construction new orders over the first quarter of 2014, which were down 6.3% on Q4 2013, with a huge 45.7% drop in orders for public new housing, the largest fall since the bulletin began in 1964. The report said that a possible reason for the fall in public housing new orders was housing associations’ switch to private investment from public grant.
All new work components, chained volume measures, seasonally adjusted
Source: Construction: Output & Employment – Office for National Statistics
There was also a 16.5% drop for infrastructure, a 14.6% drop for private industrial work and a 1.9% drop in private commercial work.
In better news, other public new orders increased by 6.8% over Q3 and private housing new orders rose by 2.8%.
Simon Rawlinson, head of strategic research and insight at consultancy EC Harris, commented: “Today’s new orders figures are an indication that the momentum that has been building up in the industry over the past 12 months may not have been as strong as previously thought. Setting aside the remarkably deep fall in orders in the public housing sector, one of the most significant trends is that the volume of new orders measured at a national level has been shrinking in real terms for the past three quarters – with the rate of decline accelerating in Q1 2014.”
He added: “Overall volumes are still significantly higher than seen a year ago, but the figures show a breakthrough into sustained high levels of activity isn’t happening just yet. The commercial sector, flat-lining at just over £3bn a quarter, is a good illustration of this.”
And Michael Dall, lead economist at construction intelligence specialist Barbour ABI, commented: “While the overall picture is one of growth, the fact that the construction industry continues to be dominated by private housing should sound a note of caution. This is especially concerning as new orders fell in most other key sectors including infrastructure, private industrial and private commercial. Combined, this resulted in new orders falling by 6.3% since Q1 2013.”
He added: “To safely say that the construction industry is in sustained growth then we need to see an upturn in these other key sectors, which is vital for a stronger and more durable recovery.”
