May’s construction output figures, published today by the ONS, had few surprises and, overall, conditions in the industry remain challenging. Output fell by 4.8% from a year ago and was broadly flat month-on-month, albeit following a strong bounce back in April.
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Infrastructure output increased for the third month in a row and activity was 8.9% and 3.5% higher year-on-year and month-on-month respectively. However, after a staggering 13.2% fall in infrastructure in 2012, activity was only 1.4% higher in the first five months of this year compared to the same period in 2012 suggesting that we still have a long way to go.
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Commercial, the largest construction sector, remains in the red with output falling by 12.3% from a year ago and by 0.5% compared to April. Uncertainty around economic recovery has held up investment and, despite improved prospects for the economy we are expecting 2012 to be another year of falling commercial activity.
Private housing repair, maintenance and improvement output plummeted with activity 8.5% lower year-on-year and down by 3.1% month-on-month. The end of Carbon Emissions Reduction Target programme in December last year and the slow rollout of Green Deal and ECO have hit the sector hard. Yet, a recovery in real incomes, which have been falling for four years, expected this year should boost output and provide some relief for the sector.
If activity seen in May is sustained next month, Q2 should see the industry return to growth. However, for construction industry to stage a recovery we need to see private sector return to growth. With the wider economy gaining momentum construction is expected to follow suit and 2013 may just see the industry turn a corner.
By Miljia Keijonen at 12 Jul 2013, 16:08 PM