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Uncertainty? What Uncertainty? Construction output grows again!


Latest official figures show construction output was unchanged in July 2016 compared to the previous month but second quarter new orders rose strongly.

The Office of National Statistics’ latest bulletin puts construction output growth for July 2016 at zero percent compared with June 2016.

All new work increased by 0.5% while all repair and maintenance decreased by 1.1%.

Compared with July 2015, construction output decreased by 1.5%. All new work, and repair and maintenance decreased by 0.6% and 3.2% respectively.

The underlying pattern as suggested by the three-month on three-month movement in output in the construction industry decreased by 1.2%.

New orders for the construction industry in the second quarter (April to June) 2016 were estimated to have increased by 8.6% compared with the first quarter (January to March) 2016 and increased by 7.5% compared with Q2 2015. New housing increased by 25.0% while there was a fall of 17.4% in infrastructure.

Michael Thirkettle, chief executive of construction consultant McBains Cooper, said: “The construction industry will view these figures as a welcome fillip, given they are the first gathered since the Brexit result.

“Although some projects were put on hold before the referendum, now the result is known the industry can plan with a degree of increased certainty and the majority of investors are telling us that they are not planning on cancelling any major projects. The low value of sterling is also providing an opportunity for more foreign investment in the UK, which could provide a knock-on boost to the wider residential and commercial markets so we are hopeful that construction output will pick up over the next few months.

“But the biggest concern for the construction industry with Brexit is its reliance on itinerant labour from EU countries because of acute skills shortages in the UK – a vital supply that will be cut off once we leave the EU. We are calling on the government to prioritise upskilling the UK workforce and scrap the apprenticeship levy otherwise it will mean the industry – which accounts for a crucial 6% of GDP – will suffer another downturn and there will be no chance of the government’s housing targets being met.” 

Written By David Baker (A Shore Group consultant)