CPA and ONS figures point to uncertain future

Latest figures from both the Construction Products Association (CPA) and Office for National Statistics (ONS) would indicate that the industry faces a difficult twelve months, to say the least.

Construction Products Association (CPA)

The latest CPA forecast shows industry output falling for the remainder of 2010 and into 2011, with the UK construction industry set to fall back into recession. In 2009 the construction industry suffered its sharpest fall in output since 1974. It rebounded in the first half of this year, however the CPA now warns that the figures were deceptive and only a result of the previous administration’s fiscal stimulus, combined with a tentative recovery in the housing market and the start of several major projects. It argues that it isn’t the basis for long-term recovery.

Michael Ankers, chief executive of the CPA, says, “Although 2010 as a whole is likely to be slightly better than 2009, it is very much a year of two halves, with construction output slipping back in the second half of the year as a result of growing uncertainty in the housing market and cuts in public spending”.

Ankers adds that the industry needs to see strong private sector growth to offset the anticipated reduction in public investment over the coming years. Latest figures on new orders for construction work, however, show recovery in private sector orders go nowhere near what’s needed to offset the anticipated 18 per cent fall in public sector construction work over the next two years.

Ankers predicts that by 2014 output in the industry will still not have recovered to the levels it experienced in 2003. He has called on the government to invest in essential infrastructure and recognise that spending cuts and tax rises alone will not secure long-term economic growth.

Office for National Statistics (ONS)

New orders in the construction industry fell by 14 per cent in the second quarter of the year according to figures published by the Office for National Statistics. They also fell 9 per cent compared with the same period in 2009. The sector suffering the biggest fall was private housing, which dropped 24 per cent compared to the previous quarter, although it rose by 7 per cent compared to the same period in 2009. Similarly, public housing fell 23 per cent quarter-on-quarter, but rose 12 per cent year-on-year.

Other notable findings include:

• Private commercial orders fell 7 per cent from the first quarter, but rose 4 per cent year-on-year.
• Private industrial orders rose 26 per cent from Q1, but fell 13 per cent year-on-year.
• Infrastructure fell 22 per cent from the first quarter and year-on-year.
• Public non-housing (excluding infrastructure) fell 13 per cent from the first quarter, and fell 17 per cent year-on-year.

 

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