Construction output falls again

August 12, 2016 / Isla MacFarlane
Construction output falls again

Output in the construction industry decreased 0.7% in the second quarter of 2016, according to ONS estimates. In June 2016, construction output decreased by 0.9% compared with May 2016.

The reporting period includes data for a short period after the EU referendum. There is very little anecdotal evidence at present to suggest that the referendum has had an impact on output, the ONS said.

The preliminary estimate of gross domestic product (GDP) for Quarter 2 (Apr to June) 2016, published on 27 July 2016, contained a forecast for construction output of a fall of 0.4%. The ONS estimate has been revised downwards by 0.3 percentage points based upon further survey responses; output is now estimated to have decreased by 0.7%.

Compared with the same period a year ago, there was a fall of 10.1% in infrastructure: the largest fall since Quarter 2 in 2012. Other new work remained fairly flat since 2004, but has increased by 1.0% in Quarter 2 2016 compared with Quarter 1. Compared with the same period a year ago, total new housing increased by 1.8%.

Despite a (0.4%) monthly fall in total new housing, demand for housing increased in June, with HM Revenue and Customs’ UK Property Transactions Statistics release reporting a 4.9% monthly increase in the number of residential property transactions between May 2016 and June 2016. However, this increase comes from a relatively low base, following the commencement of higher stamp duty rates for buy-to-let properties in April 2016.

Previous figures released by Reuters and the Royal Institute of Chartered Surveyors have all shown that the vote for Brexit is starting to have an impact on the construction industry and the economy at large, following warnings last month from the National Housing Federation.

A poll by Reuters of almost 60 economists has predicted that Britain will decline by 0.1% for the next two quarters and enter recession this year.  The Royal Institute for Chartered Surveyors survey of housing market activity showed a fall to the lowest level since April 2013.

David Orr, Chief Executive at the National Housing Federation said, “We know that an uncertain economic environment will cause builders to put the brakes on. Our country’s prosperity and thousands of citizens’ livelihoods depend on a strong building sector – we cannot let a slowdown take hold.

“Housing associations have a track record of building through tough times, having upped their output through the last recession when private developers could not. With the right flexibility from Government, and at no extra cost to the taxpayer, housing associations can keep the nation building.”

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