Further deterioration in construction industry

Published:  15 September, 2009

LONDON: After suffering the sharpest fall in activity on record during the first quarter of 2009, the construction output figures from ONS for the second quarter of 2009 highlight a further deterioration in construction activity. Total output in construction fell 15% compared to the same quarter a year earlier despite growth in work funded by the public sector such as housing, education, health and infrastructure.

Private housing output fell 27% in 2009 Q2 compared to a year earlier despite recent increases in activity from house builders, which will take time to feed through into output. At the same time, private sector construction is suffering from sharp falls in industrial and commercial output.

Commenting on these latest figures, Michael Ankers, chief executive of the Construction Products Association said: “These latest output figures illustrate the impact of the recession on construction. With the industry accounting for nearly 10% of the country’s GDP, a continued decline in construction output will inevitably hold back any broader recovery in the economy as whole.”

“With the construction industry experiencing its sharpest decline in output since the War, it is more important than ever that government maintains its capital investment programme to improve our transport infrastructure, education facilities and social housing. This would provide the platform on which we can build a long term economic recovery with a skilled workforce and better infrastructure, both of which are key to UK businesses becoming more competitive. Furthermore, this will also avoid further job losses in the construction industry.”

Other figures from the report illustrated that industrial new build fell by 38% in 2009 Q2 compared to a year earlier and with new orders during the first half of 2009 falling 52%, output in the sector would be expected to deteriorate further in the near term.

Output in the commercial sector fell by 28% in the second quarter of 2009 compared to a year earlier. New orders fell 51% during the first half of 2009 and, as a consequence, further falls in commercial output are anticipated over the course of 2009 and 2010.

Public housing output rose 3% during the second quarter of 2009 compared to 2009 Q1. However, this is still 8% lower than during the second quarter of 2008 and disappointing given consistent announcements from government regarding stimuli for the social housing sector.

Output in public non-housing sector increased 26% in the second quarter of 2009 compared to the same quarter one year earlier, buoyed by work in education and health on programmes such as Building Schools for the Future and the Primary Capital Programme.

Infrastructure output rose 7% during the second quarter of 2009 compared to a year ago, primarily due to increases in investment in the rail sector and work on a few major roads projects.

Repair and Maintenance work, which accounts for 46% of total construction work, fell 16% compared to a year ago due to falls, in the main, in private sector repairs and maintenance on both residential and non-residential properties.

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