Construction emerging from recession says ONS

Published:  19 July, 2010

SLOUGH: Phil Westerman, head of construction at Grant Thornton UK said the Office of National Statistics reports contain positive news for the construction industry.

Although the total volume of construction new orders in the first quarter of 2010 rose marginally by 1% compared with the fourth quarter of 2009, it has significantly increased by 29% when compared with the same period in 2009.

"The increase in construction new orders is indicative that some construction companies appear to be slowly emerging from the doldrums. However, this is not a surprise as the construction sector usually continues to feel the pinch and lag other industries as they come out of recession.

"Despite the positive news, demand for mortgages has weakened over the second quarter of this year and both the government and consumers are expected to tighten their purse strings going forward.

"Government construction projects will be hit by a reining-in of expenditure across the board and stretched public spending could lead to another big drop in construction activity over the medium-term.

"On one hand, the recent Budget proved positive for the construction industry due to its pledge not to cut capital expenditure until the October spending review. However, this is countered by commercial property tenants coming under pressure from higher capital gains tax and VAT. We may see an increase in business failure for small to medium-sized construction businesses later this year."

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