Last month the Office for National Statistics reported that construction output had fallen. This month they have reported that new orders have grown by 4.6% compared with the last quarter of 2011, however this is down 3.6% on the equivalent quarter a year ago. Positives are the large quarterly increases in private industrial and private commercial new work and small increases for Public Sector new work. However the positives are partly due to the poor performance in the previous quarter.

Commenting on the new orders data, Noble Francis, Economics Director at the Construction Products Association said ‘With government cuts impacting sharply upon
construction, it is no surprise to see that public sector construction new orders were hit hard in Q1. Of even greater concern was that new orders for housing were so badly hit. Public housing new orders in Q1 were 41% lower than a year earlier and private housing new orders in Q1 were 14% lower than a year earlier. Yet, with large house builders reporting good results recently and expressing optimism over the next 12 months, this suggests that it is SMEs who are suffering.’

Glenigan also reported a 6% decline in project starts for the 3 months to May. Office; retail and industrial building increased, but health and education fell.

Although housing new orders were down, house prices increased slightly in May as reported by both the Nationwide (0.3%) and Halifax (0.5%). The Homes & Communities Agency has also released its official statistics for construction of new homes managed through their programmes. This shows that for the year ended April 2012 completions were down 7.5% and starts down 65.4% at just 19,967 homes. The HCA describe this as
“strong performance” in their newsletter! It has since been reported that they are talking to the government about bringing forward spending on affordable housing.

An initial tranche of projects for the government’s Priority Schools Building Programme has now been announced, with 261 schools named to receive funding. With the government’s review of PFI still incomplete it is unclear how the promised £2 billion will be provided. £400 million of direct capital funding has been made available to enable the
first 42 schools to proceed using the existing contractors’ framework set up by Partnerships for Schools.

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