UK growth continues

By Sandy Guthrie13 February 2015

UK construction output in the fourth quarter of 2014 grew by 4.8% over the same period a year earlier, although the 2014 fourth quarter figure was down on the third quarter, according to the UK’s Office for National Statistics (ONS).

Over 2014 as a whole, however, monthly year-on-year growth has continued.

Output – defined as the amount charged by construction companies to customers for value of work (produced during the reporting period) excluding VAT and payments to sub-contractors – was estimated to have decreased by 2.1% compared with the third quarter of 2014.

The 4.8% rise over the fourth quarter of 2013 was the sixth consecutive period of annual quarter-on-quarter growth.

The ONS said that downward pressure on the quarter came from repair and maintenance (R&M), which fell by 6.3% – the largest quarter-on-quarter fall since the fourth quarter of 2009 when it fell by 8.7%. Housing reported a fall of 4.9%, and non-housing R&M a drop of 7.7%. New work increased by 0.6% on the quarter.

Following falls in October and November 2014, output in the construction industry was estimated to have increased by 0.4% in December 2014 compared with November 2014.

The ONS said that for the year, the picture was one of continued growth, with output in the construction industry increasing by 5.5% in December 2014 compared with December 2013 – the 19th consecutive period of year-on-year monthly growth.

When comparing the 2014 annual data with 2013, output in the construction industry was estimated to have increased by 7.4%. All work types recorded increases except infrastructure, public other new work and private commercial work. The largest increase was reported by total new housing, increasing by 23.0% in 2014 compared with 2013.

Chris Temple, engineering and construction leader at accountant PwC (PricewaterhouseCoopers), said, “While the fourth quarter of 2014 output decreased compared with the previous quarter, the construction sector continues to show healthy year-on-year growth and our clients are optimistic about the year ahead, with most expecting growth in 2015 in excess of 3%.

“There is still an overhang from the recession of companies bidding low rates for work. We expect this to continue in the short term but pressure from the rising costs of labour and materials mean that this is not sustainable in the medium to long term.”

He said there was a lack of immediate starts on large infrastructure projects, adding that any clarity that the government could provide in the Budget and after the General Election in May as to what projects would start, and when, would be welcomed by construction firms.

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