The ONS have released their Construction Output in Great Britain: July 2017 and new orders April to June 2017 figures, showing that construction output contracted by 1.2% on a 3 month on 3 month basis in July. This decline was mainly due to decreases in both repair and maintenance and all new work falling 1.8% and 1.0% respectively. Output also fell 0.9% in July compared to June 2017, falling for the fourth consecutive month. Alongside this, new orders fell 7.8% in Q2 2017 compared with the previous quarter, dropping to its lowest level since Q1 2014.
The August Economic & Construction Market Review from Barbour ABI also shows that all contract activity witnessed a decline in July. The value of new contracts awarded, based on a 3-month rolling average, fell to £5.4bn. This is a 2.2%% decrease from June 2017, and a 7.5% decrease on the value recorded in July 2016. And the JLL/Glenigan index shows commercial construction activity fell 9.3% to £13.7 bn in the 12 months to the end of Q2 2017 compared to Q1 2017, although new build activity only dipped by 6% to £8.4 bn.
In contrast the construction material price index for all work increased 4.8% in the year to July 2017, rising 0.2% on a monthly basis. With construction material prices for new housing, other new work and repair and maintenance rising by 5.7%, 4.8% and 5.9%, respectively in the year to July 2017.
However the IHS Markit/CIPS UK Construction PMI August 2017 report, shows a marginal increase in overall construction activity, due to a robust rise in housebuilding, offset by a marked fall in commercial work. The Index registered 51.1 in August, the weakest overall UK construction performance since August 2016.
In contrast the CBI’s latest monthly Industrial Trends Survey, for the three months to August 2017, 30% of firms on balance reported an increase in output volumes. And looking to the next three months, a balance of 30% of firms expects output volumes to grow. With manufacturers reporting strong growth in both domestic and export orders for August 2017.
This construction downturn has been blamed by some on Brexit and the government’s handling of it. Mark Robinson, chief executive of procurement body, Scape Group, has urged the government to “get its act together”. Simon Rawlinson, head of strategic research at multinational consultant Arcadis tells Building Magazine “We anticipated that Brexit would begin to have an impact on key construction markets in 2017 and there are signs that uncertainty is now feeding directly into the opportunities available for contractors”.
According to HMRC, in July 2017 the number of residential transactions in the UK totalled 104,760. This shows a seasonally adjusted figure of a 1.3% increase from June 2017 and 8.3% higher compared to a year earlier but at around the same level as July 2015. The Bank of England Report that the number of mortgages approved for house purchase increased 5.2% on a monthly basis. House purchase approvals reached 68,689 in July 2017, the highest number reported since March 2016. And on an annual basis, an increase of 11.3% was registered.
The latest housebuilding data from the DCLG shows that 164,960 new homes were started in the year to June 2017. This is an increase of 13% from the previous year, an increase of more than three-quarters since the low in 2009. More than 153,000 new homes have been completed during the same period, showing an increase of 11% compared with the year before.
The Halifax House Price Index reports that August 2017 house prices increased 1.1% compared to July, edging upwards for the first time since March 2017. And annual house prices increased by 2.6% from July 2017. In contrast the Nationwide House Price Index reports that in August 2017 house prices were 0.1% lower than July. And annual house price growth slowed to 2.1%, showing signs of cooling in the housing market and wider economy.