The latest ONS figures for construction output show a marked improvement on the figures released as part of the preliminary Q2 GDP estimate, which had construction output declining on a quarterly basis by 0.5%. This estimate has been revised to 0.0%, which on an annual basis means that output grew by 4.8%.
In our most recent forecast we anticipate that total construction output will grow by 4.7% in 2014. Looking at these latest figures from the ONS, for the major sectors, comparing the first half of 2014 to the first half of 2013, output grew by 5.2%, slightly faster than our forecasts but, largely in line with our expectations.
For private housing, public housing and infrastructure, there are considerable differences between the latest data and our forecasts. Going forward however, we are confident for housing at least that as the year progresses data will fall in line with our projected trajectories.
Although public housing added 31.0% in H1 compared to a year ago, the second half of the year is expected to weaken significantly due to the unprecedented fall in orders in Q1. ONS reported that orders for public housing declined by 45.7% in Q1.
For private housing, the first quarter of 2013 was disrupted due to bad weather, which taken together with the housing market’s recovery only becoming firmly entrenched in the second half of the year, the H1 year-on-year growth rate of 20.0% is unlikely to be sustained throughout the second half of 2014. A more realistic picture can be drawn by comparing 2014 H1, to 2013 H2, which shows growth of 8.4%.
For infrastructure, as we mentioned in our forecasts, the official data still seem at odds with the ongoing work; i.e., work peaking on Crossrail and so on. There is ongoing research into the issue, which when resolved will probably warrant a blog post… so watch this space.
Generally, the figures were in line with our most recent forecasts and the industry looks set to grow 4.7% in 2014. This is good news for the economy, where fears of a lopsided services led recovery are beginning to emerge. But, based on this latest construction data it looks like services won’t be left to do all of the heavy lifting after all!
- See more at: http://www.constructionproducts.org.uk/blog/v/view/construction-on-track-to-grow-pound5-billion-in-2014/#sthash.Odt1M5Oi.dpuf