Private sector is also in decline after having shown signs of recovery last two years
There will be some people expelling phews of relief at seeing construction output for the second quarter revised up by the Office for National Statistics from a dramatic drop of 5.2% to a less frightful fall of 3.9%. Certainly this will have the effect, all other things being equal, of lifting the rather shocking GDP drop of 0.7% by 0.1% or so. Not much, but a little.
On balance things are probably not that different from what we thought when the GDP preliminary estimates were released. That is, they are ugly for construction.
The only sector to show growth quarter on quarter was non-housing repair and maintenance and that was pretty much flat when you consider how accurately you can measure these things.
Public sector construction is in sharp decline. Construction work associated with new public housing is less than half what it was two years ago and public non-housing is about 45% down.
The private sector is also in decline after having shown signs of recovery in 2010 and 2011. Construction work in private housing is almost 40% below its peak and after its recovery from the hell of mid 2009, it fell back sharply again in the second quarter. Private commercial building work is more than 30% below its peak and it too is declining again after a hint of recovery.
The private sector is also in decline after having shown signs of recovery in 2010 and 2011
What is distressing is that there is no clear sign as we look up the pipeline of where the boost in private work will come from.
The government has made much of the impact construction could have on improving the overall economy. It’s already too late for it to have an immediate impact and to slow the current sharp slide into recession.
But it is never too late for it to do something that will have an impact down the line. And decisive action now could have a short-term very positive impact on confidence.