Construction recession deeper than expected

Published:  11 May, 2012

UK: Today's data from the Office of National Statistics show that construction output fell by 5% in the first quarter of 2012, considerably worse than the estimate of -3% that ONS previously indicated for GDP in Q1.

Noble Francis, economics director at the Construction Products Association said: “The construction industry is now firmly back in recession and, although there are some areas of growth, such as private housing, the overall picture shows an industry clearly suffering from the effects of public sector cuts.”

Public housing output fell 11% during the first quarter of 2012 and public non-housing, which covers education and health, fell 7% in Q1.

“Although government expected that the private sector would fill the void, the Q1 figures show that this was not the case,” Mr Francis said.

Construction output in the private sector also contracted in Q1, suffering from poor confidence and lack of lending. Private commercial, the largest construction sector, fell by 7.1% in Q1.

“Unless confidence and lending improves significantly, private sector construction will remain subdued and the effects of further public sector cuts are likely to ensure that construction has a negative impact on the wider economy over the next 12 months.” 

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