Construction output stagnates but new orders are on the up

Construction output showed no growth in July when compared with the previous month, but new orders rose at the fastest rate in a year, official statistics have revealed.

According to the Office for National Statistics (ONS), new orders for construction in Q2 2014 were estimated to be 3.8% higher than in Q1.

There were increases in infrastructure (20.8%), private commercial (9.6%), public new housing (7.3%), and public other new work (0.3%). Private new housing and private industrial fell by 6.3% and 1.9% respectively.

Despite these falls the levels of these series were still higher than the downturn in this series which began in Q1 2009.

Output in the construction industry showed continued year-on-year growth for the 14th consecutive month, increasing by 2.6%.

However, this growth was the weakest since November 2013 (1.5%).

Responding to the latest statistics, Michael Dall, lead economist at construction intelligence specialist, Barbour ABI, said: “It’s encouraging that new orders are continuing on a positive trajectory, but with the rate of growth slowing from recent quarters, today’s announcement still isn’t the silver bullet we need to dispel all concerns about the performance of the construction sector.

“What is particularly interesting in today’s figures is the growing strength of new orders in the private commercial sector and especially for office contracts where we’ve seen an increase by 29% in Q2 versus Q1 this year.

“Early indications from our monthly Economic and Construction Market Review however, point to a summer slowdown on the commercial side. We would need to see consistent growth in this area before we can confidently say it is having a real impact on the industry.”