The construction industry is about 10% smaller than it was a year ago on a quarter-to-quarter comparison and it has been shrinking at almost £1 billion a month recently. That’s pretty scary stuff. It should be scaring the pants off the policy makers.
There will be some people expelling phews of relief at seeing construction output for the second quarter revised up by the Office for National Statistics from a dramatic drop of 5.2% to a less frightful fall of 3.9%. Certainly this will have the effect, all other things being equal, of lifting the rather shocking GDP drop of 0.7% by 0.1% or so. Not much, but a little.
Today’s estimated second quarter fall in construction output of 5.2% presented in the GDP data has caused quite a ripple of shock. Should it?
The consensus among UK’s top construction forecasters is that things are worse than we thought. A week ago we saw Experian and Leading Edge downgrade their forecasts for construction growth. This week we see the Construction Products Association do the same and Hewes & Associates will follow suit when it is published shortly.
The Government’s intervention to boost infrastructure spending is timely. The construction data is almost all pointing in a southerly direction. The latest construction activity survey from the surveyors’ body RICS, released today, suggests workload among its members shrank in the second quarter.
The latest batch of industry forecasts are emerging and they show construction locked in a deeper recession than previous expected. The recovery now looks further away. Top graph shows how the industry appears to be facing a pretty deep and protracted second recession.
The latest output figures released by the Office for National Statistics on Friday appear to support growing concerns that the decline in construction workload might be accelerating. Analysis of the data suggests that as the decline in public sector work is gathering pace the recovery in the private sector is petering out.
The latest official data for new orders in construction could be read as good news. They show an up-tick of almost 5% in the first quarter of this year on the seasonally adjusted measure. That sounds promising on the face of it and many might claim that it is. But that would be to look at a small detail in a much bigger picture that looks far from promising.
The Office for National Statistics confirmed its preliminary estimate that construction was again in technical recession. Indeed its latest estimate is that construction fell further in the first quarter of this year, dropping by 4.8% rather than the 3% it estimated for the GDP figures released late last month. Not too much should be read into the revision. The scope for revisions up and down was great as the initial stab was based on limited data. It was also unclear…
There’s very often a paradoxical upside to bad news, as I’m sure the Taoists among us will readily accept. It will be disturbing news if the next set of stats show that measured construction output collapsed in the first of this year. But, weird as it may seem, that might just provide a fillip for real action to support an industry that gets more political attention than it does sensible assistance. Let’s start the story from the growing media attention…