ONS construction output: Industry reaction to latest figures

Industry reacts to figures released for construction output in April.

Friday saw the release of the latest construction output figures from the Office for National Statistics (ONS) which showed that although the rate of output in April decreased from March, the longer-term indicators painted a positive picture.

The rate from March to April 2015 has decreased by 0.8% but the year-on-year figure when compared with April 2014 has actually grown by 1.5% – the 23rd successive time that the monthly year-on-year construction output has shown growth.

Between March and April, new work went up and new housing fared particularly well with an increase of 5.4% recorded.

April was a good month for public and private housing, both of which performed well.

Similar to the monthly pattern, the quarterly results showed a slight decrease from the previous quarter, but again, when compared to January to March last year, the corresponding output in 2015 has increased by 8%.

UK Construction Media has got some reaction to these figures from people within the industry.

Stefan Friedhoff, Global Corporates Managing Director for construction at Lloyds Bank Commercial Banking, believes the results, and the PMI survey data recently released, along with “boardroom confidence rising,” shows that the industry is in decent shape.

He said: “This ONS data covers April and therefore pre-dates the May PMI survey, which suggested a more confident construction sector as a period of sustained uncertainty came to an end.

“With the trading and investment environment now more stable, construction firms are looking to revive the buoyancy of previous months.

“Order books remain healthy and there is hope of a renewed focus on long-term infrastructure investment and that customers will respond to the increased certainty.

“Meanwhile, with boardroom confidence rising, consolidation in the sector is back on the radar. These tie-ups often provide useful synergies and the diversification that can offer the keys to future success.”

The latest ONS figures are significant because these are the first that have implemented an interim solution for the Construction Price and Cost Indices, replacing the existing deflators.

It is something that the Construction Products Association (CPA) is happy to see and Dr Noble Francis, Economics Director, attributed the slight monthly drop to General Election uncertainty, and pointed out that the growth in new orders should mean greater productivity.

“The CPA has previously highlighted issues regarding the ONS construction output data and we welcome the new construction output price deflators that the ONS has implemented in this data release,” he said.

“As the ONS states, the new price deflators are an interim solution; the CPA will be working with the ONS to ensure that the construction output figures will be as robust as possible in the medium-term.

“Total construction output fell slightly in April but this was expected due to the uncertainty prior to the General Election and its adverse impacts on consumer and business confidence.

“Overall, construction output was still 1.5% higher than one year earlier and, looking forward, the ONS new orders for construction point to further growth in activity over the next 12-18 months.”

While much of the reaction was positive, Roger Allsup, partner of Construction and Engineering practice at law firm SAS Daniels, told UK Construction Media that the skills shortage needs to be addressed so that construction output remains positive.

He said: “The shortage of contractors to do the work is also leading to a delay in producing outputs. Until more people enter the construction industry, there will be pent-up demand because the supply of contractors and resources has not yet caught up with demand.”

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