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Construction quarterly output falls 10%

17 Dec 12 Construction output fell 5% in October 2012, compared to October 2011, and was down 10% for the three month period August-October, according to official statistics.

The value of new work fell by even more, down 12%, the Office for National Statistics (ONS) reports.

David Crosthwaite, an economist for construction consultant Aecom, commented: “October was yet another bad month for construction. ONS data suggests that output declined yet again, this time by 5% compared with the same period last year. In terms of quarterly output (August to October) the picture was even worse with a 10% decline year on year. 

“Publicly funded construction continues to be the worst affected sector with some major declines evident, particularly in the public housing sub-sector which is almost 21% lower than the same period in 2011.

“Hence, it appears that one way of arresting the continuing decline in construction output would be for the government to bring forward any public sector investment plans as a matter of urgency. Construction is an important part of the UK economy as a whole, providing the facilities that we all need to be productive.

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“Thus, the continuing decline in this sector will have inevitable consequences for the wider economy going forward.”

Scottish Building Federation chief executive Michael Levack said: “Compared to the same period last year, the value of new construction work has plummeted by 12% during the three months to October this year. Falls in public sector output have been particularly dramatic, suggesting cuts to capital investment are now hitting the industry hard. I welcome the Chancellor’s commitment to redirect funding towards stimulating the construction industry but those additional funds will take time to have any effect. Meanwhile, many building firms are facing the prospect of another harsh winter. They need to be given much greater certainty about the future pipeline of work through a revised Scottish Infrastructure Investment Plan.”

Mr Levack also called for Scottish clients to stop giving work to contractors from outside Scotland who undercut local firms. “We need to put an end to suicidal tendering from contractors with limited experience of operating in Scotland, which is undercutting firms with a much stronger Scottish track record,” he said.

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