The ONS have released their Output in the Construction Industry figures for February 2015. Output in February 2015 was estimated to have decreased by 0.9% compared with January 2015, with all new work and repair and maintenance being the main contributors to the fall. When compared with February 2014 output in February 2015 showed a decrease of 1.3%. The ONS also report a decrease in output of 2.6% in January 2015 a fall of 3.1% year-on-year.
The Construction Products Association do not agree with the ONS figures. They conclude that for Q1 2015 the ONS are stating construction output would be negative, indicating two consecutive quarters of contraction, meaning the construction industry has returned to recession. The CPA do not agree because the ONS figures are not supported by other construction surveys, carried out by a wide range of construction organisations. These all indicate that activity for construction rose in January and February 2015.
The Construction Products Association have released their construction industry forecasts for spring 2015. In 2015 construction output is expected to increase by 5.5%, this increase is greatly influenced by predicted growth in private housing, commercial and infrastructure. The CPA forecast growth to slow in the next 2 years, due to an expected break in private and public investment because of election uncertainty, causing a knock on effect on future construction projects.
Further concerns about economic uncertainty are expressed in a letter sent to The Telegraph signed by 103 business leaders, this warns that a labour government could put UK recovery at risk. The letter was sent just a day after figures show the UK economy growing faster than expected. With the 2015 general election campaign underway, Glenigan have produced a report on the impact the general election will have on Construction. This summarises construction-specific issues that will directly impact the industry, and where the parties stand on other key issues. The Construction Industry Council have published an Election Briefing. The message conveyed is that “construction is a key engine for UK Economic growth”, and that “it is a vital enabling sector which can spread jobs and prosperity throughout the wider economy”.
The Markit/CIPS Construction Purchasing Managers Index registered 57.8 for March 2015 down from 60.1 in February 2015, and still above the neutral mark of 50.0. The latest reading points towards a strong rate of overall construction output growth, with business confidence at its highest level in 9 years.
UK Construction PMI - March: 57.8
Source: Competitive Advantage Consultancy Ltd