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New Orders in construction fall to the lowest in three years

ONS figures published on Friday, September 8, show that construction output in July fell by 0.9% and was 0.4% lower compared with one year earlier. In addition, new orders in Q2 declined 7.8% and fell 12.6% on an annual basis.

Rebecca Larkin, senior economist at the Construction Products Association (CPA), commented: “Today’s data from the ONS confirms that alongside a 1.3% contraction in output in Q2, new orders in construction hit the lowest level since 2014 Q1.

“In particular, the sectors suffering the largest falls were the industry’s largest three: private housing, commercial and infrastructure. Commercial new orders began tailing off in the second half of 2016 and are 11.2% lower since the EU Referendum. Whilst this downward trend was expected amid the rising uncertainty, giving way to a reluctance to invest in new office space. Private sector house building and infrastructure are the key drivers of growth in the CPA’s forecasts for 2018 and 2019. New orders in these key sectors were the lowest since 2015 and highlight that there are now lower volumes of work queued up in the pipeline.

“Nevertheless, for the year to date, construction output is still 1.3% higher than a year ago. The weakness in new orders is factored in to the CPA’s forecasts for 2018, with construction growth slowing to 0.7% as activity on projects reaching an end is not replaced at the same rate.”

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