It has recently been announced by ONS, that new construction orders for the industry are at their lowest since the first quarter of 2014, despite other industry housebuilders announcing record profits.
The latest figures show that output across the construction industry fell by 0.9% in July, which is a further 0.4% lower than July 2016. Aside from this, it has been said that new orders during the second quarter were 7.8% lower, translating to an overall reduction by 12.6% over the year.
According to Rebecca Larkin, an economist at the CPA, ‘for the year to date, construction output is still 1.3% higher than a year ago.’
According to the research, the largest drops in new construction orders have been realised by the private housing, commercial and infrastructure sectors, with commercial orders tailing off and falling more than 11% since the UK referendum. Uncertainty in the UK over Brexit has been blamed for much of this reduction, yet rising materials costs, and a lack of skilled construction workers is also cited as good reason.
Ms Larkin continued, ‘In particular, the sectors suffering the largest falls were the industry’s largest three: private housing, commercial and infrastructure. Commercial new orders began tailing off in the second half of 2016 and are 11.2% lower since the EU Referendum. Whilst this downward trend was expected amid the rising uncertainty, giving way to a reluctance to invest in new office space. Private sector house building and infrastructure are the key drivers of growth in the CPA’s forecasts for 2018 and 2019. New orders in these key sectors were the lowest since 2015 and highlight that there are now lower volumes of work queued up in the pipeline.’
The CPA has allowed for the reduction in the number of new construction orders in its forecasting for 2018, and has factored in the loss of replacement projects for those that have now reached or are near completion.