Positive outlook for construction output
New orders for construction point to significant growth going forward following pre-election dip in output
THE latest construction output from the Office for National Statistics (ONS) indicates that overall activity in the industry dipped 0.8% in April 2015, compared with March, although output was still 1.5% higher than in April 2014 and, going forward, new orders point to significant growth over the year ahead.
Commenting on the figures, Dr Noble Francis, economics director with the Construction Products Association (CPA), said: ‘Total construction output fell slightly in April but this was expected due to the uncertainty prior to the general election and its adverse impacts on consumer and business confidence.
‘Specifically, this influenced the kinds of construction work that can be temporarily delayed, such as repairs, maintenance and improvements work, which fell 4.8% in April. New construction work was affected to a lesser extent and, despite election uncertainty, private housing output was 4.5% higher than in March and 16.6% higher than one year earlier.
‘Overall, construction output was still 1.5% higher than one year earlier and, looking forward, the ONS new orders for construction point to further growth in activity over the next 12 to 18 months.’
According to Dr Francis, new orders in the first quarter (Q1) of 2015 were 8.0% higher than one year earlier, with orders growth in all three key construction sectors; private housing, infrastructure and commercial.
Private housing new orders in Q1 were 1.5% higher than a year earlier, pointing to further growth in house building but at a potentially slower rate due to skills and capacity constraints. Infrastructure new orders in Q1 rose by 68.9% as work continued to feed through on major projects in the £466 billion National Infrastructure Plan. New orders in the commercial sector in Q1 rose by 14.9% due to a boost from offices and retail projects in central London, Birmingham and Manchester.
Dr Francis concluded: ‘The CPA has previously highlighted issues regarding the ONS construction output data and we welcome the new construction output price deflators that the ONS has implemented in this data release. As the ONS states, the new price deflators are an interim solution; the CPA will be working with the ONS to ensure that the construction output figures will be as robust as possible in the medium term.’
