February 17, 2016

Latest ONS forecast shows deeper dip in construction output in Q4

News Article

Construction output dipped 0.4 per cent, quarter-on-quarter, over the last three months of 2015, according to the latest set of Office of National Statistics (ONS) forecasts.

The sector contracted 0.4 per cent in the fourth quarter, a deeper drop than the ONS’ initial estimate of a 0.1 per cent drop.

However, year-on-year, the sector grew 3.4 per cent over the final quarter compared to the same period in 2014.

The latest update also contained the ONS’ first full estimate of output in December 2015, which increased by 1.5 per cent compared to the previous month.

This rise was due to an increase of 2.6 per cent in all new work, but this was partly offset by a 0.5 per cent decrease in repair and maintenance work.

Mark Robinson, chief executive of contracting authority Scape, commented: “Despite a small quarter-on-quarter dip in construction output at the end of last year, today’s report gives us a big picture view of how the construction sector fared across 2015 – and the prospects for a continued upward trajectory look very promising.

“Output growth for the year as a whole, at 3.4 per cent, was lower than the historically strong growth seen in 2014 but still well exceeded trends during the economic downturn.” Markit economist Tim Moore claimed construction firms were struggling for momentum, with increased economic uncertainty holding back new orders and contributing to one of the weakest rises in output levels since summer 2013.

"Taken together with the slowdown in new order growth, the latest survey suggests that construction companies are braced for a relatively subdued first quarter," he said.

David Noble, chief executive of the Chartered Institute of Procurement and Supply, blamed the dip on a shortage of bricks and blocks which, he claims, had contributed to the slowdown.

Adam Davis, a Palmers partner who specialises in construction and engineering law, said: “It is clear that the construction sector still faces a number of challenges, but despite this dip, the long term trend shows growth within the sector and, for companies who have both the skills and resources in place, there are undoubtedly new business opportunities to be grasped. Our experience in working with the construction sector means we are ideally placed to provide independent, practical advice to help firms develop and grow.”

To find out how our experience of the sector can help you, please contact us.