The second quarter fall in new orders reverses the increase of 10.4% in the first quarter of the year. All sectors apart from infrastructure experienced a decrease in comparison with Quarter 1 2019.
The ONS said that the monthly construction output had been experiencing a downward trend since recording a record high in February 2019. However, in July 2019 construction output was up by 0.5% on the previous month. This partially reverses the decline of 0.7% seen in June 2019 but continues a trend of subdued growth over the latest year, the ONS said.
Over the three months May to July, construction output decreased by 0.8%, driven predominately by a fall in repair and maintenance of 2.2% with a minor contribution from a 0.1% fall in new work.
Industry comment
Gareth Belsham, director of the national property consultancy and surveyors Naismiths, said: “Even by the volatile standards of the construction industry, contractors’ order books have been subjected to both feast and famine this year. The surprise surge in new orders seen in the first quarter has been entirely wiped out after the calls simply stopped coming in the second quarter.
“But despite a largely grim backdrop of declining output, such extreme swings in new orders offer a paradoxical bright spot – as they hint at the depth of latent demand that is being held back as clients hold off on pulling the trigger.
“Yet there is only so long moth-balled projects and deferred investment decisions can be held back. After more than three years of crushing uncertainty, it’s no longer clear whether the deadlock stands a better chance of being broken by a ‘no-deal’ Brexit or another delay.
“For now the cost of Britain’s endless limbo is etched in both the balance sheets – and the confidence – of British builders. Construction output is falling, orders are tailing off and as last week’s PMI data showed, confidence has fallen to its lowest level since the dark days of 2008.
“With investors sitting on their hands until the final Brexit showdown ends – one way or another – the industry’s coolest heads are battening down the hatches and shoring up their capability up in hope of a surge of deferred investment in the final months of the year.”
Scape Group chief executive Mark Robinson said: “The construction industry continued to hold the breaks down on activity in July, evident through the £333m drop in new work. Further decline in the coming months risks putting smaller, more vulnerable firms out of business.
“As parliament continues to go from one drama to another, businesses are suffering, and time is running out to secure a good deal for the UK. In a no-deal scenario, delays to construction imports will be inevitable, which could stop projects up and down the country in their tracks, wiping out profits for businesses across the sector, and delaying some of our most vital projects. Delaying the inevitable will only prolong uncertainty and our ability to move forward. We need a government and a leader who can safeguard the future of UK plc.
“Shockingly, the data also reveals a £339m drop in private housing repair and maintenance. This is not good enough. Clearly, the removal of benefits and tax advantages for private landlords has had a detrimental impact on housing stock, as landlords have less money to make improvements. Poor and sub-standard housing can have far-reaching effects on a person’s physical health, mental wellbeing and quality of life, so it’s vital that the government implements greater oversight and scrutiny of the sector. Not only to ensure that tenants are protected, but also so we can hold landlords accountable through tighter regulations.”
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