The latest Office of National Statistics figures show that there was a 0.2% increase in construction output in November compared to October. When compared to November 2010 it is 1.6% lower. In view of the various question marks over the ONS figures in recent months it is probably best to view this as a flat second half for 2011. In their recent State of Trade Survey the Construction Products Association found that heavy-side manufacturers had suffered more than light-side manufacturers, possibly reflecting the fall off in new projects. The latest State of Trade survey from the FMB also reports that workloads continued to decline in the final three months of 2011. There is expected to be no let-up in the first three months of 2012, with just 14% of respondents anticipating an increase in workloads whilst 44% expect a further decline.
Looking ahead the Construction Products Association paint a gloomy picture with output in 2012 expected to fall by 5% and remain flat throughout 2013. The only positive sectors are energy and infrastructure (with the £32.7 bn HS2 rail link confirmed), both of which are expected to show significant increases in activity. This view is broadly supported by Experian who expect a slightly greater drop in 2012 but some recovery in 2013. One difference of opinion is private housing, with the CPA expecting only 1% growth, Experian 5% and Glenigan predicting 20% growth.
In their trading update Persimmon have been positive with upwards of 50% improvement in profitability expected. They maintained the level of completions in 2011 and have forward sales at a higher level than this time last year. In their trading statement Taylor Wimpey have also announced over 80% profit improvement in the second half of 2011 with completions up by 2% for the year. They said the first weeks of 2012 have continued the encouraging pattern of the second half of 2011. Galliford Try also published their trading update, reporting a 59% increase in completions for 2011 in this principally southern based business. While remaining optimistic for 2012 they did not give any details.