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ONS correction shows construction new work at 32-year low

The level of new work in construction plummeted to its lowest level since 1980 in the second quarter of 2012, rather than staying flat as government figures had claimed a few weeks ago.

A correction to the Office for National Staistics new orders figures today showed they fell by 8.5 per cent between Q1 and Q2, rather than growing by 0.2 per cent, as had been stated earlier this month.

The updated figures, published today, also found that new work fell 0.3 per cent year on year rather than growing 11.1 per cent as was originally stated.

The figures show the seasonally adjusted volume of new orders hit its lowest level since the third quarter of 1980, which was the worst quarter since published records began in 1964.

The fall in industrial new orders between the first and second quarters of 2012 remained almost the same as in the earlier data at 20.1 per cent.

But private industrial work fell by a much greater degree than previously stated, dropping 25.9 per cent rather than 13.3 per cent.

Construction Products Association economics director Noble Francis said: “On the private side, the concerning fall has to be commercial because it is the biggest sector and the most reliant on business investment.”

He said continuing turmoil in the eurozone and a flatlining domestic economy discouraged firms from investing in commercial buildings.

He added that the falls in new orders point to future drops in construction output.

But the drops in work would not necessarily occur in the third or fourth quarters of the year, as infrastructure and commercial projects take time to get on site.

EC Harris head of strategic research Simon Rawlinson said the correction “reveals the accelerating weakness of the commercial sector”.

He said: “The revised numbers for commercial indicate that the current pipeline is weaker now than at any time in the past 20 years, underlining the damage that continuing lack of confidence in the letting and project finance markets is having on this key sector of the industry.

“Workload has fallen in real terms in five out of the past eight quarters, and the value of work awarded over the past 12 months is lower than at any time since before the 1980s boom.

“These are dark days for the industry, and the health of the forward pipeline is critical for planning, recruitment and funding.  

“The continued delay in a return to stable trading conditions will maintain pressure on all levels of the supply chain.”

He said the initial error in the ONS data should be investigated and “appropriate quality control measures put in place.”

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