New housing lifts construction output
Construction output decreased by 2% in the three-month on three-month series in November 2017, representing the sixth consecutive period of decline in this series and the biggest contraction since August 2012, according to figures released by the Office for National Statistics. However, despite continuing to fall in the three-month on three-month time series, construction output grew month-on-month, increasing by 0.4% in November 2017.
Construction output peaked in March 2017, reaching a level that was 31% higher than the lowest point of the last five years, January 2013. Following the month-on-month increase in November 2017, construction output is now 27.6% above this level.
Since the beginning of 2015, new work, and repair and maintenance have followed a broadly similar pattern; both repair and maintenance, and new work have risen steadily, resulting in all work reaching a level peak in January 2017.
The 0.4% month-on-month rise in construction output in November 2017 occurred due to increases in both repair and maintenance, and all new work.
Total repair and maintenance increased by 0.5%, following three consecutive months of decline. Elsewhere, all new work grew marginally, expanding by 0.4% in November 2017 – all new work accounts for approximately two-thirds of all work, while repair and maintenance accounts for approximately one-third.
Construction output fell by £779 million in the three-month on three-month time series. This fall has been broadly driven by decreases in private commercial work, infrastructure and total housing repair and maintenance. Private commercial work decreased by £401 million in November 2017. Meanwhile, both total housing repair and maintenance, and infrastructure continued their recent declines, falling by £164 million and £157 million respectively.
The majority of other sectors were broadly flat in November 2017, with only private housing providing a positive contribution to growth, increasing by £100 million; representing the fifth consecutive period of growth in this sector.
Construction output in November 2017 increased by £55 million compared with October 2017. This increase has been driven primarily by an increase in the value of new housing work, with private housing increasing by £111 million and public housing increasing by £13 million. The only other notable increase came from total housing repair and maintenance, which increased by £18 million in November 2017.
The only negative contributions to growth came from infrastructure and private industrial work. Infrastructure fell for the third consecutive month, decreasing by £66 million. Meanwhile private industrial work fell sharply following growth in October 2017, contracting by £36 million.
Compared with November 2016, construction output also grew 0.4%. This month-on-year increase was driven by a 1.2% rise in total repair and maintenance, stemming from 4.1% growth in private housing repair and maintenance. In contrast, month-on-year growth in all new work was flat. The continued growth in both public and private new housing work was offset by falls in all other types of new work, including infrastructure and private commercial work, which fell 4.1% and 2.2% respectively.
Rebecca Larkin, senior economist at the Construction Products Association, said the data confirmed that construction ended 2017 on a weak note.
“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.
“It now looks impossible that the industry avoided a full quarter of contraction in Q4, with the £30 billion private housing sector contributing the only positive story. Therefore, construction is set to have caused a drag on overall UK economic growth during the quarter.”