Quarterly output shrinks 0.4%
Official estimates indicate that construction industry output shrank by 0.4% in the fourth quarter of 2015, compared to the third quarter.
While new work was up by 0.2%, repair and maintenance (R&M) output decreased by 1.4% in Q4 2015, according to latest estimates from the Office for National Statistics (ONS).
However, there was a 3.9% fall in new infrastructure work, which the Civil Engineering Contractors Association described as “a shock”.
Year-on-year, construction output in Q4 2015 was up 0.4% on Q4 2014, according to ONS figures.
In December 2015 output in the construction industry is estimated to have increased by 1.5% compared with November 2015 due to an increase of 2.6% in all new work. This was offset by repair and maintenance, which decreased by 0.5%.
For the full year, output in the construction industry in 2015 was estimated to have increased by 3.4% over 2014. All new work increased by 6.8% while repair and maintenance decreased by 2.2%.
Tony Lenehan, chief executive of fit-out contractor Styles&Wood, was not too concerned. “While ONS figures suggest output across the construction sector is stuttering, we are continuing to see strong opportunities in the refurbishment and fit-out markets,” he said. “Developers are ramping up activity across the commercial office sector, particularly in London and the northwest – where there is a significant lack of supply. We're currently working on 250,000 sq ft of commercial schemes in Manchester alone and our new business pipeline is double where it was this time last year. This is predominantly being fuelled by demand for Grade A office space. Significant sums are being invested here and this isn’t just impacting growth, it’s also a positive economic indicator.
“We’re also seeing the re-emergence of retail, with aggressive expansion plans from value retailers having an impact on the rest of the market. While this sector only represents a small proportion of our order book, there are good signs of recovery and we’re expecting it to hold increasing value for us in the next few years. In addition, particular segments such as private healthcare are presenting sizeable opportunities, particularly given consumer demand for high quality spaces.
“From a clients’ perspective, there’s an increased demand for support on projects that have an unusual or technical complexity to them – be that completing the works in a live environment, structural alterations to improve lettable area or carrying out work on the external cladding of a building, in addition to the internal fit-out. This, combined with a lack of capacity in the market and with clients struggling to pull tender lists together, is putting those contractors with an integrated offering in the driving seat when it comes to winning work with better margins.”
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This article was published on 12 Feb 2016 (last updated on 12 Feb 2016).