According to data analysed by the Office for National Statistics, the volume of construction output fell by 1.2% in three months to the end of November 2011 (-£338m). New work fell by 1.3% (-£241m) and repair and maintenance fell by 1.0% (-£97m).
The only increases were in new infrastructure work, which increased by 14.7% (+£436m); private commercial new work, which increased by 2.8% (+£178m); and non-housing repair and maintenance, which increased by 4.0% (+£189m)
New public non-housing work showed the largest fall of 14.9% (-£536m).
Commenting on these figures, Construction Products Association economics director Noble Francis said: “Construction output remains extremely subdued having fallen for three of the previous four months and output in the fourth quarter of the year is now likely to fall, mirroring the recent disappointing economic news from the manufacturing sector.
“The recovery in private sector construction is still very sluggish and with the anticipated sharp falls in public spending on construction in 2012, the industry is now expected to see a fall in output of over 5per cent this year, with no sign of recovery until 2014.”
.gif)
Quantity surveyor Simon Rawlinson, head of strategic research & insight at EC Harris, commented: “The success story of 2011 has been infrastructure – up 11% on 2010. Sustaining this level of activity into 2012 will be critical for the overall fortunes of the industry. The surprise of 2011 has been the public sector – still down by only 5% compared to 2010. Activity levels in November are similar to output throughout the year – so there is no sign of workload falling off a cliff… yet.
“This reinforces the impression that for construction, the pain has been deferred, but has not gone away. Third quarter data shows that there was an improvement in the order book, but work won during 2011 is still 15% down on the same period in 2010 – a truly grim prospect for the coming year.
“This month’s release includes some additional cuts of the output data. Including an analysis of output by different sizes of enterprise. Surprisingly, small enterprises employing four people or under have increased their share of total workload from 15.5% in 1Q 2010 to over 20% in 3Q 2011. This increase in market share is at the expense of larger businesses employing 100 or more.
There are two possible explanations for this trend. Firstly, an increasing number of construction businesses have shrunk to below the four employee threshold. The second explanation is that smaller, low overhead businesses are competing successfully for work in a very price competitive market, and that clients – main contractors and employers – are ‘trading down’. This is hardly the model of a highly efficient, well trained and capitalised industry ready to drive the growth agenda. The implications for productivity, efficiency and low term development of skills in the construction industry could be significant if this shift to downscaling were to be sustained.
Got a story? Email news@theconstructionindex.co.uk
