Private work falls drag output down by 9.5%

Grant Prior 12 years ago
Share

The total volume of construction output fell 9.5% during the second quarter of 2012 compared to the same period last year.

The dramatic drop came as private sector work started to mirror the downward trend of public sector spending and output for the three months fell to £24.4bn.

The Office for National Statistics said: “Over recent periods, public sector output has been decreasing while private sector output has remained relatively flat.

“However, the decrease in this quarter is more evenly spread, with falls in private housing output for both new work and repair and maintenance and also falls in new private commercial and industrial work.”

Over the year, the largest falls in new work were seen in public housing (25%), infrastructure (24.8%) and other public non-housing (21.2%).

Repair and maintenance output fell by 2.8% over the same period, with a drop of 8.5% in repair and maintenance for private housing and a fall of 3.9% for public housing.

This was slightly offset by non housing repair and maintenance, which grew by 0.8%.

The largest fall was in infrastructure (8.6%), while private commercial – the biggest sector – showed the smallest fall, decreasing by 0.6%.

Noble Francis, Construction Products Association Economics Director said:  “Looking at these figures, it is very hard to find anything positive to say in any part of construction.

“Across the 12 different construction indices, only one, non housing repair and maintenance, shows any growth at all and that at just 0.8% year on year and 0.1% quarter on quarter.

“However, what is most concerning is that private sector activity has also fallen sharply, implying that not just activity but also confidence is sadly lacking.

“This situation is rapidly becoming a crisis and at this rate I wouldn’t be surprised if manufacturers begin to shut down their operations and lay people off.

“There is an urgent need for government to address this situation by immediately embarking on a programme of repair and maintenance across all areas of the country, especially for housing and roads, clarifying the model by which private finance will be attracted to enable investment in major infrastructure projects and deciding government priorities for the amount of capital investment the country needs to stimulate growth.

“Without these measures recovery is unlikely to happen anytime soon.”

Steve McGuckin, managing director of the construction and programme management consultancy Turner & Townsend, said: “All the sunshine and Olympic feelgood factor in the world can’t hide the fact that these are black days for the construction sector.

“Stagnation has moved from the stuff of nightmares to the new norm.

“Despite Sir Mervyn King’s assertion this week that the economy is ‘slowly healing’ – construction is still walking wounded.

“Output in the last quarter tumbled to levels not seen since the depths of the 2009 recession. The big drop in infrastructure output is of particular concern for the economy as a whole.

“Many in the industry had hoped that if they could just limp through 2012, next year would be better. But with the sector continuing to contract, the optimists are being forced into a drastic rethink.

“The pressure is causing a schism between the sector’s limited number of big players who have a strong balance sheet and the capability to deliver the big projects, and the small and medium-sized firms who are being squeezed by ever-greater competition.

“As a result those in the middle ground are having to slash margins to negligible levels – and in the most extreme cases, some firms are pitching for work at below cost, simply to keep cash-flow coming in.

“Such desperate measures are clearly unsustainable, and the industry as a whole is having to adapt to a tough environment which is still showing scant signs of improving.”

Latest news

Geoffrey Osborne supply chain hit for £26m

More than 500 suppliers and subcontractors left holding unpaid bills
7 hours ago

SME contractors agree 4% pay rise for site workers

Workers will also get an extra day of holiday
4 hours ago

Labour to mothball £320m A27 job to fix potholes

Manifesto confirms Arundel Bypass canned as "poor value for money"
11 hours ago

Lendlease’s £1.9bn Smithfield Birmingham scheme approved

Initial work to start later this year despite questions over Lendlease's degree of involvement
12 hours ago

Crest Nicholson rejects £650m Bellway bid

Second Bellway approach rebuffed
20 hours ago

Hill submits £800m East London estate rebuild plan

Over 1,900 homes to be built in five phase at Teviot Estate in Poplar
1 day ago

Plan approved for 8,500-seat Edinburgh indoor arena

Construction expected to start next year once a contractor is appointed
10 hours ago

Statom starts on £25m Bristol Airport precast car park

Major work package on transport upgrade being overseen by Griffiths Farrans JV
1 day ago

Build problems plunge Crest Nicholson to a £31m loss

House builder unearths more defects on completed sites
1 day ago

Rebooted Amey lifts contract win rate to 1 in 3 bids

Amey chief says firm exceeded expectations in first year under new owners
1 day ago

BAM Nuttall fined £2.3m after worker drowned

Court hears how series of safety failures led to tragedy
2 days ago

OCU buys Scottish civils contractor RJ McLeod

Deal takes multi-utility infrastructure specialist revenue to over £800m
2 days ago

£220m plan to restore secret wartime tunnels approved

Tunnels under High Holborn to become cultural exhibition space
2 days ago

Galliford Try wins £69m Scottish school job

Deal sealed on Paisley Grammar School project in Renfrewshire
1 day ago

Balfour wins design for £690m Skye transmission job

Main work contract for 137km power line to be awarded later this year
2 days ago

Student and resi developer Fortis goes under

Cheshire based developer follows construction arm into liquidation
2 days ago

Construction output falls for third month running

Heavy rain and strong winds blamed for sharp fall in activity in April
2 days ago

Plan in for Leeds 27-storey block of flats

390 flats planned at former Morgan Sindall office site
2 days ago

Firms readied for £1.5bn Parliament estate upkeep deal

Invitation to tender due to go out next month
3 days ago

Amey switches kit supplier

Deal with HSS was worth £24.5m a year to rental specialist
2 days ago

Track workers scatter to avoid runaway rail trolley

Track trolley careers 1km towards work site
2 days ago

Direct delivery model pays off as Murphy profit soars to £67m

Group operating margin jumps from 3% to 5% in record year
3 days ago

Ex-Galliard boss to lead Battersea next building phase

Don O’Sullivan joins as plans advance to start phase 3C of power station redevelopment
3 days ago

£100m Digbeth 33-storey flats job out to bid

483 flats will be delivered for Clarion housing association
3 days ago

Van Elle fined £233,000 after piling rig kills driver

Court hears how tragedy was caused by poorly maintained plant
3 days ago

Renew buys utilities contractor Excalon

Infrastructure giant expand into electricity transmission market with £26m deal
3 days ago

Planning for new homes plunges to record low

Home builders call for urgent action from incoming government
3 days ago

JTRE starts £400m 21-floor London tower scheme

Office block and 64 affordable homes to be built at 220 Blackfriars Road site
4 days ago

R G Carter construction profits up despite 24% revenue fall

Selective client choice help profit jump to £6m from £1m previously
4 days ago

Refurbs power London office work to record high

London Office Crane Survey office work starts exceed 4m sq ft for record third quarter
4 days ago

Contractor services