Construction output falls by £1 billion in Q1 as private housebuilding declines

May 10, 2018 / Isla MacFarlane
Construction output falls by £1 billion in Q1 as private housebuilding declines

The fall was broad-based but was led by an 8.8% decline in public housebuilding activity and a 5.9% reduction in public non-housing work. Private housing output recorded a fall of 1.6% over the quarter. Compared to a year earlier, total output was 4.9% lower during Q1.

Rebecca Larkin, Senior Economist at the Construction Products Association, said, “This release confirms what was reported in preliminary GDP data: construction had a poor opener to 2018. The 2.7% contraction in output was revised up from the initial estimate of a 3.3% decline, but this still represents the weakest outturn since August 2012 and a £1.04 billion loss in output in three months.

“Output declined in each month of the quarter, undoubtedly capturing the pauses in work relating to Carillion’s liquidation in January and the snow disruption in February and March. Notably, private housing lost its position as the industry’s star performer, with output falling from a record high, but activity is expected to accelerate as we enter the Spring selling season.”

Construction output fell by 2.7% during the three-month on three-month period to March 2018, representing the fifth consecutive three-month on three-month decline in output. The decrease stemmed from a fall in all new work, which also continued to fall following a contraction in February 2018, decreasing by 2.9%.

Mark Robinson, Scape Group Chief Executive, said, “Today’s ONS construction data shows that the industry continued to struggle in March, as the unseasonal weather impacted the speed of project delivery and new work commencing. However, we can expect the data to pick up following the CIPS/Markit announcement last week, which shows that activity rebounded in April.”

Following consecutive periods of month-on-month growth in the final two months of 2017, construction output reached a record high. However, in the first three months of 2018, construction output has subsequently begun to contract, decreasing by 2.7% in the three-month on three-month series in March 2018.

Construction output peaked in December 2017, reaching a level that was 30.3% higher than the lowest point of the last five years, April 2013. Despite the month-on-month decrease in March 2018, construction output remains 22.7% above this level.

Construction output fell by £299 million in March 2018 compared with February 2018. The main contribution to the fall in all work came from a decrease in the value of private housing new work, which fell sharply in March 2018, decreasing by £121 million.

Construction output fell by £1,043 billion in the three-month on three-month time series in March 2018, stemming from falls in all but one sector.

The recently strong private housing sector, which has experienced consistent growth in this series since June 2017, fell by £139 million.

Construction output also fell in the most recent three-months on year series, contracting by 2.7%. The increase in private housing, which grew 6.0%, was more than offset by falls in public other new work, which contracted 14.1% and private commercial work, which decreased 6.8%.

Robinson said, “Whatever the weather, the industry has a lot of catching up to do if they are going to meet targets for this year. Over the past decade the UK has benefited from the government’s strong and unwavering commitment to infrastructure investment across the country, and this momentum must continue as we swim in to more austere waters, and edge closer to our exit from the EU. Taking bold decisions now will benefit local communities in the years ahead.

“It is very positive to see that private residential building increased by £6 million on the year – but this growth is still not anywhere near the levels needed to meet housebuilding targets. It is clear that the government needs to think more creatively about housing delivery. A combined effort between the public and private sectors is vital and government needs to equip local authorities with the funding powers to make a real difference in meeting housing need.”

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