UK construction orders down 10% in Q1

Estimated seasonally-adjusted new orders in the UK construction industry fell 10% in the first quarter, compared to the last three months of 2012, data from the UK Office for National Statistics (ONS) shows.

The drop was solely due to a decline in infrastructure work, which fell 49.8%, or by £1.6 billion (€1.9 billion) quarter-on-quarter, according to ONS. This is the largest fall in new infrastructure orders since the fourth quarter of 1987.

New orders are a short term indicator of contracts for new construction work awarded to contractors by clients in both the public and private sectors. Compared to the first quarter of 2012, ONS estimates show a 0.2% fall in new orders.

Noble Francis, economics director at the UK Construction Products Association, said the quarter-on-quarter halving of infrastructure orders came despite the government’s "regular and enthusiastic" pronouncements of support over the last two years.

These include the Chancellor’s £5 billion (€5.9 billion) capital investment boost in last year’s Autumn Statement, £20 billion (€23 billion) in new private investment in infrastructure and a further £5.5 billion (€6.5 billion) capital investment boost in December.

“The government must do better at translating such infrastructure announcements into new orders and real activity on the ground," Dr Francis said.

"Those aimed at housing are clearly delivering a beneficial effect –infrastructure must match this if we are to have a sustained economic recovery.”

Indeed, excluding infrastructure there was growth in all other sectors. ONS data for new housing orders showed a small increase in the first three months of the year of 0.2%, bringing new housing to its highest level since the first quarter of 2008. Compared with the first quarter of last year, new housing orders increases 29.5%, or £760 million (€892 million).

Dr Francis said, “Government policies – particularly FirstBuy, Funding for Lending and the recently announced Help to Buy – are giving major house builders the confidence to build. Because private housing has a short time-lag between orders and output, these new orders should lead to a further rise in housing activity this year.”