Output down but quarterly comparisons show improvement

Construction had a sluggish start to the year with output down 0.4% in January month-on-month, according to the latest ONS figures.

Output was driven down by a 1.3% fall in repair and maintenace work, while growth in overall new work flattened to 0.1%.

However, infrastructure work grew for the third consecutive month, up 3.5% on the previous month.

Overall output in January was also up on the same month the previous year by 2%.

The ONS also released new orders figures for the final quarter of 2016, which showed a 2.8% decline quarter-on-quarter, which it put down to falls in private industrial and commerical work.

Despite this dip, the annual volume of new orders is at its highest level since 2008.

The statistics body also disclosed a string of upward revisions to its estimates for construction output in 2016 and it now believes the sector grew 2.4% last year, up from its previous estimate of 1.5%.

There were upward revisions for all four quarters, including a 0.8% revision for the final quarter from October to December, to growth of 1%, up from 0.2%.

Michael Thirkettle, chief executive of consultant McBains Cooper, said the latest figures showed that a real recovery for construction was “fragile at best”, after a Spring Budget “brought news of national insurance rises and loss of tax relief on dividend payments to hit the self-employed in particular, which includes 167,000 construction workers – people who are vital for ensuring the government’s housebuilding targets are met”.

Thirkettle said that in the short to medium term, worries over Brexit “remain a constant. We stand to lose a significant number of the 12% of UK construction workers who come from EU countries as a result of Brexit, which means we will be in a parlous situation.

“Building new homes to meet the government’s targets for solving the housing crisis are already significantly behind and the recent Housing White Paper really didn’t do enough to make planning processes simpler or free up more land,” he added.

However, Mark Robinson, chief executive of procurement body Scape, welcomed confirmation of a jump in infrastructure work, commenting: “The government’s commitments to invest in Britain’s infrastructure is finally starting to make its mark, as we see new infrastructure orders in the last quarter jump up a huge 33% on the year.

“Growth shouldn’t stop here with the Spring Budget reaffirming yet more investment into both the Midlands Engine and the Northern Powerhouse– proving that finally we have a Chancellor who is truly sticking to his word about building a stronger UK plc as a whole, and not just building in Whitehall’s back yard.”