Brexit fears add to 0.8% fall in January new work output

Aaron Morby 12 months ago
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Construction work output slipped back 0.2% in January led by a 0.8% fall in new work while repair and maintenance rallied to rise by 0.8%.

The latest monthly figures suggest the industry is slowing but the ONS has been fickle with its previously published figures for the last quarter of 2015. Today it also revised a previously estimated 0.4% fall in output during the last three moths up into 0.3% growth.

ONS monthly orders figures

ONS jan 2016

Despite the upward revision, new order figures also published this morning for the last quarter of 2015 point to easing growth rates with a 0.5% fall compared to the third quarter.

Michael Thirkettle, chief executive of construction and property consultancy McBains Cooper, said: “We are seeing the uncertainty around Brexit delay investment decisions, which is dampening the market. At the same time, the sector is desperately short of skilled workers – particularly bricklayers, carpenters and electricians. 

“If the UK leaves the EU, construction companies fear they would lose access to the pool of skills from Europe that they are relying on – making a bad situation worse.”

Noble Francis, economics director at the Construction Products Association, said:  “The fall in the ONS’s construction output in January was disappointing but largely reflects the impacts of poor weather at the start of the year with floods in many parts of the country. 

“In addition, skills shortages in sectors such as house building have meant that project costs have risen and affected the viability of sites.”

“Our forecasts anticipate that output will increase 3.6% in 2016, with growth in the three largest sectors of construction; private housing, commercial and infrastructure. 

“Nevertheless, while fundamentals such as projects in the pipeline remain good, the risks around the forecast are quite high due to skills shortages, concern about the delivery of major projects like Hinkley Point C and increased uncertainty for investors owing to the EU referendum.”

In the January returns by for new construction work, there were decreases in public new housing (-10.6%) and infrastructure (-8.6%).

These falls were offset by increases in private commercial (4.7%), public other new work (1.6%), private industrial (0.7%) and private new housing (0.6%).

Within the repair and maintenance sector, housing jumped3% while there was a decrease of 1.5% in non-housing repair and maintenance.

Compared with January 2015, output in the construction industry decreased by 0.8%.

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