Construction output figures for the second quarter of 2011 were today revised upwards by the Office of National Statistics, from 0.5 per cent to 2.3 per cent. Yet despite this improvement the underlying direction continues to cause widespread concern as public sector cuts are only just beginning to affect these figures.
Commenting on the ONS revision, Kelly Forrest, senior economist at the Construction Products Association said: ‘Although these figures for 2Q indicate a slight improvement for construction output, they come after two quarters of contraction. It would therefore have been very surprising if the industry hadn’t experienced some recovery. Unfortunately if you examine the figures in detail, they show that whilst private sector work has started to recover, it is nowhere near enough to offset the public spending cuts from the Comprehensive Spending Review. This quarter has seen public sector work fall by less than 1 per cent, so there is plenty more contraction still to come.
‘This means that the outlook for the next 18 months is very poor and we are forecasting an fall in construction output of 1% this year compared with 2010 and a further 2% fall in 2012. We are not anticipating a return to growth until 2013, and inevitably this will be a constraint on recovery in the wider economy as construction accounts for nearly 10% of GDP.’