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Declining output 'no longer a blip' as orders fall

Construction new orders dropped 1.3 per cent in the final quarter of 2017 while output declined for the ninth consecutive period, according to new data from the Office for National Statistics.

The decline in new orders for October to December was led by falls in housing, industrial building and public works, with the latter two sectors dropping 24 and 22 per cent respectively compared with 12 months earlier.

Commercial construction and infrastructure works helped to offset some of the year-on-year declines, though commercial orders were still 16.6 per cent below the £3.97bn recorded in Q1 2017.

Overall, new orders ended 2017 at the second lowest level recorded during the past two-and-a-half years.

Naismiths MD Blane Perrotton said: “After ending 2017 weakly, the construction industry has got off on the wrong foot in 2018 – posting its ninth consecutive quarter of falling output.

“Such a sustained slowdown can no longer be dismissed as a blip.”

The latest output figures also disappointed, showing a 1 per cent fall in November to January compared with the pervious three months.

This marked the ninth consecutive period of declining output.

CPA senior economist Rebecca Larkin said: “After three quarters of decline last year, it appears that 2018 is unlikely to herald a resurgence in industry growth.

“The fall in activity in January is likely to have been worsened by any pause on projects due to the liquidation of Carillion in the middle of the month.

“The snow disruption in February and March adds to the downside forces on construction during the opening quarter of the new year.”

The decline in output was led by the commercial sector, which was down 4.1 per cent quarter on quarter, with the value of work done in January hitting the lowest level since March 2016.

Repair and maintenance work dropped by 2.1 per cent quarter on quarter, making it five consecutive periods of decline.

Looking ahead, Ms Larkin suggested bad weather in February and early March would add to the “downside forces” on the industry for the first quarter of this year.

Her view echoed recent data from Glenigan, which showed construction starts dropping 7 per cent in February compared with 12 months earlier.

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