UK: new orders in construction fall to lowest in three years

Construction output in the UK during July fell by 0.9 per cent and was 0.4 per cent lower compared with one year earlier, latest figures from the country's Office of National Statistics (ONS) reveal. In addition, new orders in the second quarter declined 7.8 per cent and fell 12.6 per cent on an annual basis, the Construction Products Association (CPA) highlighted.

Rebecca Larkin, senior economist at the CPA, commented that the data from the ONS confirms that alongside a 1.3 per cent contraction in output in 2Q17, new orders in construction hit the lowest level since the first quarter of 2014.

"In particular, the sectors suffering the largest falls were the industry’s largest three; private housing, commercial and infrastructure: private housing, commercial and infrastructure. Commercial new orders began tailing off in the second half of 2016 and are 11.2 per cent lower since the EU Referendum," she noted.

"Whilst this downward trend was expected amid the rising uncertainty giving way to a reluctance to invest in new offices space, private sector house building and infrastructure are the key drivers of growth in the CPA's forecasts for 2018 and 2019. New orders in these key sectors were the lowest since 2015 and highlight that there are now lower volumes of work queued up in the pipeline," Ms Larkin continued.

"Nevertheless, for the year to date, construction output is still 1.3 per cent higher than a year ago. The weakness in new orders is factored in to the CPA’s forecasts for 2018, with construction growth slowing to 0.7 per cent as activity on projects reaching an end is not replaced at the same rates," she added.