Construction output dips but new orders point to future growth

Brian McQuade

The latest construction output from the ONS indicates that overall activity in the industry fell 0.8% in April compared to March. New construction work rose 1.6% and basic repairs and maintenance work decreased 4.8%.

However, overall construction output was still 1.5% higher than one year earlier.

Managing director of Kier Construction’s Scotland & north-east England business, Brian McQuade, is encouraged by the figures. He said, “Today’s report highlights the steady road to recovery that the construction sector is on. Within Kier Construction, we are seeing an uplift in the a number of new contracts won and inclusion on more national frameworks – most recently we’ve been appointed to North Lanarkshire Council’s Phase 2 Schools and Centres 21 Design and Build Investment Programme.

“There is clear evidence of returned confidence by public sector clients and private investors alike as they drive forward key construction projects including schools, care homes, hospitals and community centres.”

Allan Callaghan, managing director of Cruden Building & Renewals, said, “It’s encouraging after some recent disappointing results to see a return of slow but steady growth shown in the construction industry and this is certainly in line with the uplift on the number of construction tenders that we are winning on a combination of price and quality. This medium term sustainable growth is key for businesses to have the confidence to continue to invest in skills development, education and life-long learning as we are doing.

“The double-edged sword is that as the sector recovers, the skills gap in the sector widens through trades people leaving the Industry and the shortage of replacements.”

Dr Noble Francis, Economics Director at the Construction Products Association, added, “Total construction output fell slightly in April but this was expected due to the uncertainty prior to the General Election and its adverse impacts on consumer and business confidence. Specifically, this influenced the kinds of construction work that can be temporarily delayed such as repairs, maintenance and improvements work.  New construction work was affected to a lesser extent and, despite election uncertainty, private housing output was 4.5% higher than in March and 16.6% higher than one year earlier.

“Overall, construction output was still 1.5% higher than one year earlier and, looking forward, the ONS new orders for construction point to further growth in activity over the next 12-18 months.

“New orders in Q1 were 8.0% higher than one year earlier with orders growth in the three key construction sectors; private housing, infrastructure and commercial.  Private housing new orders in Q1 were 1.5% higher than a year earlier, which points to further growth in house building but at a potentially slower rate due to skills and capacity constraints.  Infrastructure new orders in Q1 rose by 68.9% as work continues to feed through on major projects in the £466 billion National Infrastructure Plan.”