Construction output dips following earlier weakness in project starts

The slowing in project starts last year and poor winter weather combined to hold back construction output during January.

ONS data reveals that construction output in January was 0.2% down on the preceding month, dragged lower by a 0.8% for new work output. Social new housing and infrastructure sectors saw sharp falls in output of 11% and 9% respectively, which were in part offset by a 5% increase in private commercial output. 

Encouragingly repair & maintenance output also strengthened, being 0.8% up on the previous month. The rise was driven by a 5% increase in private housing RM&I work; this points to a strengthening in consumer confidence.

We anticipate the recent weakness of project starts will continue to dampen output in the near term. However, February’s rise in project starts recorded by Glenigan Index suggests that contractors have begun to make up ground over the turn of the year. 

Furthermore we remain positive about the medium term prospects for the industry. We expect private sector investment to remain the principal engine for industry growth, with a strengthening in project starts anticipated for during the second half of this year and during 2017.

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