Comparing the three months from March 2013 to May 2013 with the same three months a year earlier, the volume of construction output decreased by 4.8%. However there are signs of recovery in housing.
New work was lower by 5.5% with large falls in public other new work and private-commercial other new work, which reported decreases of 18.1% and 10.1% respectively.
There was also a 3.4% decrease in repair and maintenance mainly due to a 5.6% fall in housing repair and maintenance.
Construction output fell by 2.4% in Q1 2013 after a short-lived return to growth (0.8%) in the previous quarter.
Looking at the longer term trend, GDP has fallen by 3.9% in the five years since the first quarter of 2008, whereas construction output has fallen by 18.9% over the same time period. Construction estimates are highly responsive to the economic cycle and have provided some of the largest downward contributions to GDP.
In terms of volume, construction output fell to £23,669 million in Q1 2013. This is the lowest level since Q1 1999 and £309 million below the previous trough in Q3 2009
ONS say anecdotal evidence suggests that bad weather conditions in certain periods and subdued underlying
demand contributed to the weak performance of the construction sector. In addition to this subdued demand, year on year comparisons may have been affected by May 2012 having only one bank holiday as opposed to the usual two.
Commenting on the latest ONS construction output data, Simon Rubinsohn, RICS Chief Economist, said: “Output during the second quarter is running 2.2 percent above the level recorded in the first three months of 2013. If maintained, this will represent the biggest quarterly gain since the autumn of 2010. The key driver of the improving trend in construction this year has been the housing sector, which was highlighted in the last RICS construction market survey. Interestingly, today’s data suggests that there may have been a pick-up in public sector developments alongside the more widely recognised increase in private sector home starts. The only other area of new build to show any material growth is infrastructure.
“Significantly, the data released this morning will strengthen hopes that initial stab for Q2 GDP published later this month will show an acceleration in economic activity in the second quarter of the year with growth quite possibly jumping from 0.3 percent to 0.6 percent. Despite this, concerns remain about the sustainability of the recovery and Mark Carney will be keen to follow up his initial remarks following the July MPC meeting with some forward guidance on interest rates in the wake of the August meeting.”
Construction estimates are a key component of GDP. The most recent estimate of gross domestic product (GDP) confirmed the UK economy grew by 0.3% in the first quarter of 2013 following a contraction of 0.2% in Q4 2012.