When we suffered a cold snap back in February last year I looked at the impact of the great freeze of 1962/63 on construction output. In a word it was huge.
So, as I walked into work this morning chipper as a child as I trudge though inches of snow and took in the Christmas card scene, I wondered what was the effect of the cold snap in February on the figures and what might we expect the impact of this cold snap to be on construction output.
Memo: I must get a life...
Anyway here is a graph illustrating some rough sums just looking at the impact on new work alone (I chose to ignore repair, maintenance and improvement. Why? Because I think I don’t trust the data).
I used the quarterly constant price seasonally adjusted figures on the basis that these are the ones the statisticians have treated to get a roughly even pattern of output. A huge leap of faith, but these are only fag packet calcs on the basis of crude and perhaps dodgy assumptions.
The calculated loss to construction (just on new work) appears to be in the range £400 million to £900 million depending on your assumptions of where the “natural” line of decline in construction would have been without the cold snap.
Put another way it’s a drop of roughly 3% to 6% in activity.
Add in some for loss of RMI work and it appears that a nasty cold snap might cost the construction industry up to £1 billion in turnover over the period.
The good news is that all that delayed work is not necessarily lost and you are likely to get a kick in activity in the following quarter as projects are brought back on schedule.
The bad news is that the delay in work - and in turn payments - will play havoc with the delicate cashflow of struggling firms.
Obviously this is crude analysis and open to challenge. There is for example a case for suggesting that the cause of the first quarter dip and subsequent upward rise in the second quarter may have roots in the various economic stimuli that the Government instituted.
But the heavy snowfalls will impact on construction. It‘s just a case of how much. So I must remind myself to look back at the figures for the first quarter of this year when they are recorded and see what they tell us.