Latest estimates from the Office for National Statistics (ONS) show that total construction output rose by 0.2% in October compared with September and was 1.0% higher than a year ago. The figures highlight the rise in private housing and the sharp fall in public housing.
In October 2015, output in the construction industry increased by 0.2% compared with September 2015. All new work increased by 1.2% while all repair and maintenance decreased by 1.5%. Within all new work, there were increases in private commercial (4.1%) and private new housing (2.3%) while public new housing, private industrial, public other new work and infrastructure reported decreases of 2.8%, 1.6%,1.2% and 1.1% respectively. Within the repair and maintenance (R&M) category, there were falls in all work types, housing repair and maintenance decreasing by 2.4% and non-housing repair and maintenance decreasing by 0.6%.
Compared with October 2014, output in the construction industry increased by 1.0%. All new work increased by 4.2% while there was a fall of 4.2% in repair and maintenance.
The second estimate of gross domestic product (GDP) for Quarter 3 (July to Sept) 2015 published on 27 November 2015 included an estimate of construction which showed a decrease in output of 2.2% in Quarter 3 (July to Sept) 2015. This estimate has been revised upwards by 0.3 percentage points to a fall of 1.9% in this release, this has no impact on GDP to 1 decimal place. More information on revisions are included in the Background notes section of this bulletin.
New orders for the construction industry in Quarter 3 (July to Sept) 2015 were estimated to have increased by 0.8% compared with Quarter 2 (Apr to June) 2015 and showed no growth compared with Quarter 3 (July to Sept) 2014. There were increases in public other new work (10.8%), private commercial (4.1%) and all other work (2.7%) in Quarter 3 (July to Sept) 2015.
The figures also clearly highlight the rise in private housing and the sharp fall in public housing.
Dr Noble Francis, economics director of the Construction Products Association, said: “After the slowdown in construction activity in Q3, it was good to see an acceleration in activity for the construction industry on both a monthly and an annual basis. However, the figures also highlight contrasting fortunes for private and public house building.
“Private housing output rose 2.3% in October compared with September and was 4.6% higher than a year ago. Going forward, policies announced by the Chancellor in his recent Autumn Statement, such as London Help to Buy, should ensure further growth in private housing output by incentivising major house builders to increase building rates over the next 12 months. However, there are mounting concerns regarding affordability in the housing market, especially in London where average house prices are already 9.6 times average earnings.
“The falls in public housing are a major concern, despite the Chancellor’s announcement of ‘400,000 new affordable homes’ in November’s Autumn Statement. Public housing output in October was 3.0% lower than September and 25.9% lower than a year ago. The ONS figures also highlight that new orders for public housing in Q3 were 26.7% lower than a year ago due to funding issues for housing associations as they face falling public sector funding, cuts in social rent and the extension of Right to Buy. As a result, the trend for public house building appears to be sharply negative over the next 12 months.”