UK construction sector declines for ninth consecutive period

The Office for National Statistics (ONS) latest data reveals that the construction sector in the UK recorded its worst monthly performance for six years as output fell by 3.4% in January 2018.

The month-on-month series of construction output figures released by ONS showed the biggest decline since June 2012. After a positive couple of months that have seen output increase, including by 1.6% in December 2017, a fall of 3.4% was recorded in January 2018. The latest results provide a stark reminder to industry leaders with the levels worse than the 0.3% contraction expected by City of London analysts. 

The three-month on three-month series of output has also been shown to decline with a 1% contraction recorded in the three months to January and therefore the ninth consecutive period of decline. 

ONS senior statistician Ole Black said: “Construction continues to be a weak spot in the UK economy with a big drop in commercial developments, along with a slowdown in house building after its very strong end to last year.”

A fall in output in private commercial work is highlighted as one of the main reasons for poor industry performance, while industrial, public non-housing and repair and maintenance are also all in decline. This was also backed up by the figures which showed that all work totals decreased to £12.6m in January 2018. 

Commenting on the ONS figures, Mark Robinson, Scape Group chief executive, said: "It is disappointing to see that construction output stalled again in January, as the toxic mix of higher costs, a weaker sterling, and an unsettled economic outlook caused the total value of work to fall to £12.6 billion - down almost 4% on the year. However, it is important to remember that there remains a very significant need for new schools, housing and infrastructure to meet the demands of the UK's ever expanding population. The Government should use next week's Spring Statement to double-down on investment for growth. Quicker decisions from the Government on more ambitious projects, such as the new Heathrow runway, would go some way to lift the mood in the industry.”

Michael Thirkettle, chief executive the construction consulting and design agency McBains, claimed the decline could be blamed on the continued uncertainty surrounding the Brexit deal which was emphasises by the lack of new work being taken up.

Thirkettle added: “These latest figures are evidence that 2018 began much the same as 2017 ended – a continuation of sluggish output not helped by factors such as ongoing uncertainty over the Brexit deal. The fact that this week the government has challenged the construction industry to build more homes will require a stable economy and a supportive environment that encourages builders to build, otherwise there is absolutely no chance of the government’s ambitious housebuilding targets being hit.”

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