Data from the ONS bore bad news for the construction industry, showing a decline in growth as housebuilding stalled.
In Quarter 3, the first quarterly estimate for construction output covering the post-referendum period, output in the construction industry was estimated to have decreased by 1.1% compared with Quarter 2 (Apr to June) 2016.
Downward pressure on the quarterly estimates came from all repair and maintenance which decreased by 3.6%, partially offset by an increase in all new work of 0.3%.
Compared with the previous quarter, total new housing saw no growth. Private new housing decreased by 0.1%, while public new housing increased by 0.8%. Due to the much larger weight of private new housing, which accounts for approximately 87% of the total (based on Quarter 3 2016 data) the increase in public new housing could not negate the fall in private new housing.
However, on year ago levels, total housing increased by 8.7% with private new housing increasing by 10.8%, the fourteenth period of consecutive year-on-year growth. Conversely, public new housing decreased by 3.1%. This was the seventh consecutive period of year-on-year contraction in this work type.
“While disappointing, today’s figures come as no surprise to an industry that operates within an environment of significant uncertainty,” said Mark Farmer, chief executive of Cast Consultancy. “A steady hand of long term policy that supports housing development and infrastructure investment is what is now needed now to help smooth demand volatility.
“Despite the fall in output, it would be wrong to believe that this will reduce the construction industry’s skills problems. This is a short term relief from a long term and structural problem. Increasing productivity and capacity requires taking significant steps that are all about long term sustainable delivery.
“The government is going in the right direction here through their endorsement of modular housing and increased acceptance of wider housing tenure diversity. The connection of these two policy initiatives offers great opportunity for the construction industry to modernise itself and improve output potential in the future.”