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Construction output sees largest monthly decline for over three years

Construction output fell by 3.6 per cent in March – the largest decline in monthly activity for more than three years.

Office for National Statistics figures revealed the biggest month-on-month fall since December 2012, when output fell 5.1 per cent.

It is the third consecutive monthly decline so far this year, with output also falling in January and February.

Only two sectors posted month-on-month growth, with private industrial output growing by 4 per cent and public housing output up 0.5 per cent.

All other sectors posted a decline, with public ‘other’ new work (-7.4 per cent) and infrastructure (-6.4 per cent) recording the largest falls.

Even private housing, one of the strongest performing sectors in recent times, was down 0.5 per cent in March compared with the previous month.

Quarter on quarter, output in Q1 2016 was down 1.1 per cent compared with Q4 2015 and down 1.9 per cent on the Q1 2015.

Output in March 2016 was also 4.5 per cent lower than the same month in 2015 – the largest year-on-year fall for three years.

Across the sectors, only private housing (8.4 per cent) and private commercial (1.5 per cent) recorded a year-on-year increase in March.

Private industrial work saw the largest yearly fall, down 16.5 per cent, while infrastructure (14.8 per cent) and public housing (14.7 per cent) also notched significant declines.

R&M work declined 3.6 per cent month on month and 6.9 per cent year on year.

The ONS data follows statistics from the Markit/CIPS Construction PMI, which suggested that activity had fallen to its lowest level of growth for three years in April.

However, KPMG partner and head of infrastructure, building and construction Richard Threlfall slammed the ONS figures.

“Apologies ONS, but I just don’t believe today’s output figures,” he said.

“They don’t ring true with what the industry is experiencing on the ground, with strong demand across all segments and growing order books.

“Yes, the housing sector had a weaker-than-expected start, but is warming up nicely in the spring sunshine, and the civils market remains very strong thanks to pipelines of activity in road and rail. Sweepstake, anyone, on how long before we see an upward revision of the numbers?”

Construction Products Association economics director Noble Francis added that the data was likely to be revised upwards.

“Significant revisions to ONS’s construction output may occur due to late data returns, revisions to output price deflators and seasonal adjustment,” he said.

“In addition, the ONS has also stated in its release today that the timing of Easter means that March’s construction output data will be subject to larger than normal data revisions.”

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