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Construction output down 10%

17 Sep 12 The total volume of construction output in July 2012 is estimated to have been 10.1% lower than in July 2011, according to latest Office of National Statistics data.

In the three months May-July 2012, the total volume of construction output was 10.0% down on the same period of 2011, in constant prices, not seasonally adjusted. New work decreased by 14.2% and repair & maintenance decreased by 1.2%.

Over the same three-month period the volume of new infrastructure work decreased by 23.9%, new public housing decreased by 22.4% and new public other work (excluding infrastructure) decreased by 21.5%.

The ONS said that it was “perhaps worth noting” that the volume of construction output non-seasonally adjusted, increased by 2.2% between June and July 2012. This compares with falls between the two same months in 2010 and 2011 of 1.4% and 2.3% respectively.

David Crosthwaite, an economist for construction and property consultant Aecom, commented: “While the ONS construction output data look disappointing they are perhaps not surprising. Construction is by and large a response to investment and given that both public and private sector levels of investment have declined significantly during the recession the impact on construction is to be expected. New construction (in particular infrastructure) has been hit much more severely than repair and maintenance construction. Again this is largely what one would expect in tough economic times as clients are more prepared to repair and maintain existing facilities than commission new structures.

“There are calls for intervention by the government to kick-start the wider economy by increasing levels of investment in construction (a traditional response in many previous recessions) but the question remains if this government has the appetite for a policy U-turn/Plan B.”

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