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Construction work falls nearly five per cent

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The amount of construction work in Britain fell nearly 5 per cent in the year to May, according to the latest government figures

According to the AJ’s sister publication Construction News, new data from the Office for National Statistics showed construction output fell 4.8 per cent both between May 2012 and 2013 and in the three months to May 2013 compared with the same period a year earlier.

Output was static both between April and May 2013 and in the three months to May 2013 compared with the previous three months.

The biggest falls in output were in public sector work excluding housing and infrastructure, which is largely made up of education and health projects. This sector fell by 18.1 per cent in the three months to May 2013 compared with a year earlier. Private commercial work, which contains retail and office projects and is construction’s largest sector, dropped 10.1 per cent in that time which is a loss of £571m.

The only sectors to grow in that time were public housing and infrastructure. Public housing grew 3.7 per cent, and infrastructure 6.2 per cent which is a £165m gain.

Noble Francis, economics director at the Construction Products Association, said if June’s output tracked May’s then the second quarter of 2013 would be 2 per cent higher than the first, which was to be expected as Q1 had been hit by bad weather. Growth in infrastructure had occured as anticipated. Of concern were the falls in commercial and 7.7 per cent fall in private housing repairs and maintenance in the three months to May compared with a year earlier. He said: “Given that there is a bit more confidence and economic growth, it is very disappointing.”

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: “Output during the second quarter is running 2.2 per cent above the level recorded in the first three months of 2013. If maintained, this will represent the biggest quarterly gain since the autumn of 2010. The key driver of the improving trend in construction this year has been the housing sector, which was highlighted in the last RICS construction market survey. Interestingly, today’s data suggests that there may have been a pick-up in public sector developments alongside the more widely recognised increase in private sector home starts. The only other area of new build to show any material growth is infrastructure.

“Significantly, the data released this morning will strengthen hopes that initial stab for Q2 GDP published later this month will show an acceleration in economic activity in the second quarter of the year with growth quite possibly jumping from 0.3 percent to 0.6 percent. Despite this, concerns remain about the sustainability of the recovery and Mark Carney will be keen to follow up his initial remarks following the July MPC meeting with some forward guidance on interest rates in the wake of the August meeting.”

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