Unsupported browser

For a better experience please update your browser to its latest version.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

New construction orders plummet at fastest rate since 2014

  • 1 Comment

New orders in the construction industry have fallen at their fastest quarterly rate for three years, according to the Office for National Statistics

Orders ‘for main contractors’ declined 7.8 per cent in the second quarter of this year compared with the first three months, with the largest falls coming in two sectors: infrastructure (-16.2 per cent) and private commercial (-15.6 per cent).

This represented the fastest quarter-on-quarter fall in new orders since early 2014, when they also fell by 7.8 per cent.

The last period in which there was a steeper decline was in the first quarter of 2013, when new orders slumped by 8.7 per cent.

However, there were strong performances from the public sector, where new orders rose 11.6 per cent in the second quarter; and from the private industrial sector, which posted an increase of 8.2 per cent. Public housing meanwhile reported record growth in new orders, rising by 74.8 per cent, albeit following two consecutive quarters of double-digit decline.

Looking at monthly statistics, the ONS found that construction output fell month on month in July, down 0.9 per cent compared with June. New work dipped by 1.4 per cent, driven by a fall in private housing (-3.9 per cent) and infrastructure (-2.6 per cent).

Compared with July 2016, total construction output was down by 0.4 per cent, with the largest falls reported in private industrial (-12.9 per cent) and public other new work (-11.1 per cent).

The figures support the fears of many in the profession who spoke to the AJ recently about the current slowdown and how it has affected the industry (see AJ 23.08.17).

Earlier today (8 September) John McAslan and Partners confirmed that it was ‘in discussion with a few members of staff’ about possible redundancies, blaming delays to a ‘couple of significant projects’.

Responding to the ONS data, Scape Group chief executive Mark Robinson said the figures were ‘extremely unsettling’, adding: ‘It is clear that the blend of burdens that are currently plaguing the industry are enough to make construction bosses think twice before contracting new work.

Increased construction costs and general uncertainty has the industry rattled

‘It has been over a year since the UK’s vote to leave the EU, and the government still does not have a solid plan in place.

‘Increased construction costs and general uncertainty already has the industry rattled – and the leaked immigration documents this week will have sent many into uproar.’

He said: ‘Changes in policy that result in a reduction to migrant workers – such as increased hiring costs or bureaucratic burdens – could seriously impact the industry for years to come. The government needs to get its act together and put a more positive plan in place.’

The ONS statistics follow data released earlier this week from the Markit / CIPS Construction PMI, which suggested growth in the industry hit its lowest rate for 12 months in August.


Adrian Dobson, executive director members at the RIBA

The RIBA Future Trends Workload Index bounced back a little in July, recovering some of its 13 point fall last month to stand at +14, up from +10 in June.

Practices in the North of England (balance figure +26) and the Midlands and East Anglia (balance figure +32) were more optimistic about medium-term workload prospects this month than practices in the South of England (balance figure +17). London practices remained by far the most cautious about future workloads, with a balance figure of -2.

Analysing the latest data in terms of practice size, large practices (51+ staff) returned a balance figure of +63, the highest number for this practice segment for some time. Small practices (1-10 staff), with a balance figure of +11, and medium-sized practices (11-50 staff), with a balance figure of +15, continued to be less positive than large practices.

The value of actual work in progress reported by our participating practices is continuing to grow at a modest annualised rate of 1%.

In terms of different work sectors, all our sector forecasts saw upward motion this month. The private housing sector workload forecast (balance figure +17) staged a good recovery from its big dip last month. The commercial sector workload forecast (balance figure +8) was also back on the up.

Some practices have detected nervousness from developers of large residential schemes

The community sector forecast also crept back into positive territory this month (balance figure +1). It was the public sector workload forecast that showed the biggest net increase, jumping up to +3, its highest figure for 12 months, but not yet forecasting any dramatic growth in overall public sector work.

Mirroring the workload index, the RIBA Future Trends Staffing Index was also up a little this month, rising to +10 in July 2017 from +6 in June. The vast majority of practices expect their permanent staffing levels to either remain the same or increase over the coming quarter.

Large practices, with a balance figure of +63 and medium-sized practices, with a balance figure of +16, were more confident about future staffing levels than small practices, with a balance figure of +6.

Commentary received from our participating practices suggests a steady outlook in the medium term but a sense of a more unpredictable longer term outlook. Some of last month’s pessimism seems to have lifted but signals remain mixed.

Some practices have detected nervousness on the part of developers of larger residential schemes. At the same time we have had the first reports for some time of practices struggling to recruit staff with the skills they need.

  • 1 Comment

Readers' comments (1)

  • To be fair, John McAslan and Partners might be facing delay to one of their 'significant projects' - the renovation of the Burrell - for reasons very likely totally unrelated to the accursed Brexit quagmire.

    Unsuitable or offensive? Report this comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.