Construction output drops again for second straight quarter

ONS figures published last week showed that construction output contracted 0.9% in the third quarter of 2017. This is a downward revision from the preliminary estimate of a 0.7% decline released in October and follows the 0.5% fall in output recorded in Q2.

Rebecca Larkin, senior economist at the Construction Products Association, commented: “At a headline level, today’s data shouts ‘construction recession’, marked by two consecutive quarters of falling output. However, output remains at relatively high levels – 1.1% higher than a year ago and 7.1% higher than 2015 Q3.

“There is also a clear variation in performance by sector, as highlighted in the CPA’s forecasts. Private housing output rose 1.8% to a record high during the quarter, with demand and confidence sustained by the Help to Buy equity loan. The £10 billion extra funding for the policy announced last month will maintain impetus in house building, with greater certainty over affordable rent-setting also supporting building by housing associations.

“Nevertheless, areas of weakness include private commercial, where new orders have fallen for three quarters and signal a lack of offices and retail projects to replace those now coming to an end. This is echoed in the public non-housing sector, which is suffering from lower volumes of work on schools and a dearth of new large hospitals projects.”