Construction Output falls in Second Quarter

Glenigan recorded a weakening in project starts last year and in the run-up to the referendum. This weakening in project starts is currently feeding through to industry workload. The ONS have downgraded its estimates for construction output in the second quarter of 2016, extending the fall from 0.4% to 0.7% during the quarter. This put construction output during the quarter 1.4% down compared with the second quarter of 2015.

New work sectors saw the greatest decline during the second quarter.  Overall new work declined by 0.8% during the quarter and was 1.7% lower than a year ago. The drop in repair and maintenance (R&M), was more modest, falling by 0.5% to stand 0.8% down on a year ago. 

The drop in new work was driven by sharp falls in social housing and infrastructure work. In addition there was a softening in private housing and commercial workload, which are the two largest new work sectors, although both remain up on a year ago.

In contrast industrial sector output rebounded 7.3% after a poor first quarter performance, although it remains down on a year ago. Public non-residential work also grew by 2.4% during the quarter and was unchanged on a year ago. 

The overall decline in construction output follows a previous 0.4% decline during the first quarter, indicating that the industry is technically in recession. A further weakening in output is anticipated for the third quarter as private investors delay and review projects following the referendum decision. However, the industry may subsequently benefit from increased funding in the Autumn Statement for infrastructure and public sector projects.