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Construction News
11/12/2017
Industry Output Declines In October
New figures have revealed output in the UK's construction industry fell by 1.7% in October.
Despite output being 0.2% lower compared to last year, new orders between July and September rose 37.4% and 25.5% on an annual basis.
The three-month on three-month fall in construction output stemmed from falls in both repair and maintenance, and all new work, which fell by 3% and 0.6% respectively.
The record growth in new orders was driven predominantly by growth in the infrastructure sector, caused by the award of several high-value new orders relating to the multi-billion pound HS2 programme.
In addition, housing orders increased by 9.5%, recovering from a 4.2% fall in the previous quarter.
Rebecca Larkin, Senior Economist at the Construction Products Association, said previous falls in new orders over the last 12 months "are beginning to translate into lower construction activity in the commercial and public non-housing sectors".
"In addition, output in private housing RM&I, the third-largest sector, has now fallen for two consecutive months and taken in conjunction with the recent decline in new car registrations, suggests consumer willingness to spend on big-ticket purchases is being constrained by the fall in real wages," she said.
"With regards to new orders in Q3, the strong headline growth rate was driven by infrastructure, reflecting the award of phase one contracts for HS2, a project worth £55.7 billion overall. As the ONS points out, new orders growth rates this high were only previously recorded when contracts for the Channel Tunnel were awarded in 1987. This aligns with the CPA's forecast of infrastructure as the primary driver of output growth over the next two years.
"Excluding infrastructure, new orders rose 4.1%, including a 35.4% increase in public housing, to the highest in three years as work accelerates under the Shared Ownership and Affordable Homes Programme. However, the data for new orders signals that the weakness in the commercial and public non-housing sectors is likely to continue."
(LM/MH)
Despite output being 0.2% lower compared to last year, new orders between July and September rose 37.4% and 25.5% on an annual basis.
The three-month on three-month fall in construction output stemmed from falls in both repair and maintenance, and all new work, which fell by 3% and 0.6% respectively.
The record growth in new orders was driven predominantly by growth in the infrastructure sector, caused by the award of several high-value new orders relating to the multi-billion pound HS2 programme.
In addition, housing orders increased by 9.5%, recovering from a 4.2% fall in the previous quarter.
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Rebecca Larkin, Senior Economist at the Construction Products Association, said previous falls in new orders over the last 12 months "are beginning to translate into lower construction activity in the commercial and public non-housing sectors".
"In addition, output in private housing RM&I, the third-largest sector, has now fallen for two consecutive months and taken in conjunction with the recent decline in new car registrations, suggests consumer willingness to spend on big-ticket purchases is being constrained by the fall in real wages," she said.
"With regards to new orders in Q3, the strong headline growth rate was driven by infrastructure, reflecting the award of phase one contracts for HS2, a project worth £55.7 billion overall. As the ONS points out, new orders growth rates this high were only previously recorded when contracts for the Channel Tunnel were awarded in 1987. This aligns with the CPA's forecast of infrastructure as the primary driver of output growth over the next two years.
"Excluding infrastructure, new orders rose 4.1%, including a 35.4% increase in public housing, to the highest in three years as work accelerates under the Shared Ownership and Affordable Homes Programme. However, the data for new orders signals that the weakness in the commercial and public non-housing sectors is likely to continue."
(LM/MH)
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