Private work falls drag output down by 9.5%

Grant Prior 13 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

Balfour Beatty terminates Danny Sullivan labour deals

Around 500 workers on HS2 will be moved to alternative agencies or be taken on direct
20 hours ago

Trio face prosecution after Hinkley site death

Main contractors and client to face charges over death of site supervisor
20 hours ago

Buyers see recovery in house building sector

But civil and commercial work still in the doldrums
1 day ago

Apprentice saws-off thumb on hotel refurb site

Court hears how digit was reattached and teenager continued training with another firm
1 day ago

Laing O’Rourke tops June contracts league

£919m animal super lab dominates new orders
2 days ago

TSL turnover smashes £500m as profit almost trebles

Data centre and logistics contractor rises high on surging demand
1 day ago

Gleeson Homes chief exec leaves business after restructure

Management revamp after "challenging" year
2 days ago

Green light for 1,600-home Oldham town centre overhaul

Plans for over 1,600 homes across six regeneration sites approved
2 days ago

DSM wins Norwich city centre clearance job

Anglia Square shopping centre clearance for £300m scheme
2 days ago

13-year-old becomes UK’s youngest qualified digger driver

Grandson of Gallagher Group chairman sets industry record
2 days ago

Cubby reborn in £12m Svella-backed takeover

£50m revenue target set as 14 firms combine under new Cubby Group banner
2 days ago

North East NHS trusts plot £3bn health estate overhaul

Market engagement begins for major construction push across four trusts
2 days ago

HG goes green on cranes in £1.2m switch to battery power

Diesel-free crane drive cuts fuel bills by 94%
3 days ago

Developer fined £165,000 for fire safety failings

Firm ignored fire safety orders on apartment job in Preston
3 days ago

Bidding to start for £1.8bn North West framework

Contractors invited to bid for latest Procure Partnerships deal
3 days ago

Hill hits record £90m profit as homes pipeline swells

Build-to-rent push and £4.8bn contracting book to fuel next growth phase
3 days ago

Rayner unveils £39bn plan to build 300,000 social homes

Council building revival and rent reform feature in social and affordable homes plan
4 days ago

Keltbray bounces back with £3.2m profit

Tighter controls and smarter project selection fuel strong turnaround
4 days ago

VINCI JV wins 500-home twin town centre revamps

Chester Northgate phase 2 and Northwich Weaver Square schemes move to delivery stage
4 days ago

80 energy projects unlocked as Ofgem backs grid expansion

£24bn energy networks deal gets green light from regulator
4 days ago

How to see your stories on the Enquirer

Join our Suppliers and Buyers directory to get your news published
4 days ago

Henley lands Midland Mill revamp on Leeds tower scheme

Restoration of 18th-century mill kicks off on South Bank regeneration project
3 days ago

New boss at Eric Wright Civil Engineering

Gavin Hulme takes top job as Diane Bourne moves to group role
4 days ago

Pinewood submits £1bn data centre plan

Studio giant adds green and learning spaces to tech hub blueprint
5 days ago

Record results after TClarke goes private

Britain's biggest M&E contractor flourishes after de-listing
5 days ago

Dalkia lands £200m nuclear maintenance deal

1,000 nuclear FM staff to join M&E contractor
4 days ago

Construction comeback to outpace wider economy

Arcadis forecast fueled by spending review optimism
5 days ago

First steel goes up on giant car battery site

Severfield gets to work on McAlpine Somerset site
5 days ago

Permasteelisa wins cladding deal on Bovis city tower

Facade specialist lands package at 60 Gracechurch Street
4 days ago

Fox buys recycled asphalt specialist Fisher

Acquisition adds major recycled asphalt capacity in north west
5 days ago