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Construction output suffers biggest quarterly decline in five years

Construction output growth has hit its worst level since 2012, according to new data from the Office for National Statistics.

Output for all new work in the three months from September to November declined 2.1 per cent compared with the period June to August.

This represented the biggest rolling three-month decline since the middle of 2012.

CPA senior economist Rebecca Larkin said: “Today’s data confirms what has been signalled by early indicators and industry surveys: that construction ended 2017 on a weak note.

“It now looks impossible that the industry avoided a full quarter of contraction in Q4.”

Output of new work fell in all sectors apart from private housing over the three months to the end of November.

Commercial output suffered the biggest fall in the period, declining 5.4 per cent compared with June to August. This marked the sector’s biggest decline since 2012.

Infrastructure also disappointed, with output during the three months down 3.3 per cent on the previous three.

Private housebuilding, the only sector to see output grow, increased by 1.2 per cent compared with June-August.

Naismiths managing director Blane Perrotton said the figures reflected a general concern about the overall state of the UK economy.

“Britain’s housebuilding boom is no longer providing a ‘get out of jail’ card for the struggling construction industry,” he said.

“At best it’s sugaring an increasingly bitter pill. Both commercial property and infrastructure construction suffered a steady loss of momentum during 2017, as investors have continued concerns over the future course of the economy.”

Ms Larkin noted that a weakening in the industry had been evident in other recent data from the ONS.

“Past falls in new orders, particularly in the commercial and public non-housing sectors, now appear to filtering through into lower volumes of work,” she said.

Figures out last month covering the third quarter of 2017 revealed that new orders hit their highest level for a decade.

However, this was driven by the signing of HS2’s huge phase one civil contracts.

With these removed, new orders were up 0.5 per cent compared with Q3 2016. This followed on from a 0.4 per cent fall in Q2 2017.

Mr Perrotton said: “Few industries are more susceptible to shifts in investor confidence than construction, and if the coming months fail to deliver greater clarity on what the real impact of Brexit might be, the commercial and infrastructure sectors will stagnate further.”

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