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Housing 'flat' as construction growth stalls

New housing output was flat last month, ending a growth spurt which has seen the sector balloon by a fifth over the last 12 months

According to the latest ONS output estimates, construction output fell by 1.1 per cent in May 2014 compared with April when it recorded a 1.2 per cent increase, according to ONS estimates.

Compared with May 2013, output increased by 3.5 per cent, reports the AJ’s sister title Construction News.

Housing new work was the biggest driver of new work in the last year, with both public and private housing seeing substantial increases of 29.3 per cent and 16.8 per cent respectively.

In the last three months, private housing output is up 19.9 per cent, compared to the same time a year earlier, but was flat on the previous month.

Infrastructure output is down 8.1 per cent in the same period.

Total housing output is up 21.9 per cent in the last three months compared to the same period in 2013.

This resulted in all new housing increasing by 19.4 per cent.

Housing output is now up 51.3 per cent on January 2010, when monthly time series data records began.

Steve McGuckin, UK managing director of Turner & Townsend, said: “The surprise reversal of April’s growth comes as a timely reality check for the construction industry.

“Month-on-month figures are notoriously volatile and should be taken with a healthy pinch of salt; but the sustained fall in infrastructure output - down more than 8 per cent in a year - cannot be explained away so easily.”

Both new work and repair & maintenance fell by 1.1 per cent in May 2014. The sectors with the largest contribution to the fall came from private commercial work and public other new work.

New work public housing and private industrial work increased.

Private commercial output, the largest sector, fell for the fourth consecutive month and was 19.2 per cent below its peak in September 2011.

However the smallest sector, private industrial new work increased for the fourth consecutive month but was still 11.9 per cent below its peak in August 2010.

There were year-on-year falls in infrastructure, public other new work and private commercial.

Economic context - ONS commentary

Infrastructure projects remain subdued in most areas, consistent with May’s relatively flat outturn for infrastructure.

Agents also noted that there was a gradual return of confidence to the commercial property market outside of London.

This is in contrast to this month’s official construction data, which shows falling private commercial construction over both monthly and annual time horizons.

In 2014, monthly percentage changes in output have fluctuated signficantly.

January 2014: +3.7 per cent

February: -3.3 per cent

March: -0.2 per cent

April: +1.2 per cent

May: -1.1 per cent

Annual percentage changes have shown significant increases in output.

January 2014: +9.4 per cent

February: +4.1 per cent

March: +6.8 per cent

April: +4.6 per cent

May: +3.5 per cent

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