January 2009: the worst monthly new orders figures ever recorded.

And with little sign that February will be prove any better, the latest figures for new orders underline the collapse of construction across the board.

Every sector – even public non-housing – was down on a year earlier with the exception of infrastructure.

In the monthly time series back to 1983 you will not see a worse month. You have to look back to days before the monthly series began to get a clue as to when new orders were as bad.

The January new orders figures seem to back up the view that this is the deepest fall in new orders since the early 1980s and it has all the signs of getting a lot worse in coming months.

The detailed data released by the statisticians show clearly that the new orders for big projects are beginning to shrink.

Over the few years orders worth more than £10 million have accounted for an ever bigger slice of the new orders pie. In 2003 they accounted for just 20%, by 2008 that share had risen to 35%.

While smaller orders have been in decline for some, the value of big orders had been growing. That changed in the final quarter of 2008, with the number and value of orders above £10 million dropping sharply.

With the commercial sector in dire straits we can expect this trend to continue, as there is only so much the public sector can do to fill the gap.

This means that the major contractors will now start to feel the cold wind of the recession, as their smaller counterparts have been for some while.

It is always worth adding a health warning when speculating about the future from the new orders figures. They do bounce around a lot.
But there is little doubt in the latest figures that the signs of a deep and nasty recession are flashing “red alert”.