The latest monthly construction output figures suggest that the surge in work seen in the mid part of 2010 is beginning to fade.
A significant pulling forward of public spending helped to underpin housing construction, to propel publicly funded work and engender more confidence in private sector construction work.
This created a swell in construction activity, which has caused some kerfuffle among economists as it has been the main driver of overall growth in the economy – although recent revisions to construction output will probably result in a downgrading in the GDP figure for the second quarter.
But while the data are not seasonally adjusted, there have been falls in workload in both September and October.
And if other industry indicators are anything to go by, the likelihood is that a slowdown in workload coming through – along with the inevitable hit to construction from the nasty weather we are suffering at present – will result in a drop in output in the fourth quarter.
It is early days and the new output data series has seen many revisions as it beds in, but there is a growing feeling that the third quarter of 2010 will prove to be a mini peak in what might end up being a protracted recession.
Indeed, the latest data contains further revisions with the estimate for the industry size once again rising by almost £900 million (if my adding up is right) in cash terms for the year to September – that is compared to the figures provided a month ago.
While we should expect to see many more revisions to this data series in coming months, the likelihood is that the official output figures will show 2010 solidly up on 2009. The problem for the industry though is that the prospects for 2011 are very uncertain.
Meanwhile, one interesting suggestion within the figures comes from the deflators – the coefficients used to account for price rises. These point to slight inflation in construction in September and October after several months of price falls. That said the increase in costs will in many cases have squeezed firms harder than any gains they may have made in income.