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Construction output falls for first time since 2013

Construction output has recorded its first year-on-year fall since May 2013 after it declined by 1.3 per cent in August.

Output volume for August 2015 stood at £10.56bn, down from £10.7bn for the same month a year earlier, according to data from the Office for National Statistics.

August’s output levels were also the lowest recorded in 2015 to date and the lowest in terms of volume since April 2014.

Last month’s data initially suggested that July was the first year-on-year fall since May 2013, but the figure has since been revised upwards from £10.41bn to £11.04bn due to the “incorporation of late data”.

The ONS has also revised quarterly data from its previous release, with output growth in Q2 2015 raised to 1.4 per cent having previously been recorded as 0.2 per cent.

Month on month, output fell by 4.3 per cent in August compared with July. All new work was down 3.6 per cent, while repair and maintenance (R&M) dipped by 5.6 per cent.

Across all sectors, both in new work and R&M, there was a month-on-month decline in output.

For new work, infrastructure showed the largest decline of any sector, falling 6.4 per cent in August compared with July.

Public new housing also saw a significant dip of 10 per cent and is now at its lowest point since April 2013.

Private housing output fell by 1.6 per cent month on month, while private commercial was down 1.8 per cent over the same period.

For R&M work, non-housing R&M dropped 6.1 per cent in August compared with July, while private housing R&M work fell by 4.4 per cent.

The majority of sectors also posted a decline for August 2015 compared with the same month a year earlier.

Public housing output was down 29 per cent – by far the largest year-on-year decline – while public other new work fell 4.1 per cent.

R&M output was also 8.6 per cent lower than a year earlier.

However, new work as a whole was up 3.1 per cent year on year.

Infrastructure output continued to perform strongly and was 31.6 per cent higher in August compared with the same month a year earlier.

Private housing output was also 0.3 per cent higher year on year.

The ONS data tallies with statistics from the Markit/CIPS PMI, which also suggested construction output dipped in August.

The most recent PMI, however, shows construction activity rebounded in September.

Commenting on the statistics, Scape Group chief executive Mark Robinson said: “Today’s figures need to be dissected and examined carefully before drawing any overall negative conclusions about the trajectory of construction output in the UK.

“While we have seen a contraction in the annual year-on-year growth rate, this is driven by a substantial dip in repair and maintenance output – in fact, all new work increased by 3.1 per cent annually.

“This annual growth was driven by a substantial increase in infrastructure output, which is a promising sign given David Cameron’s renewed focus on housing, which will need to be complemented by schools, hospitals, fire stations and community leisure facilities.

“It is worth remembering that pinpointing and dwelling on monthly fluctuations is unhelpful and distorts the bigger picture; we should always consider the bigger picture and take a longer view.”

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