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Decline in output for the UK construction sector

World Cement,

UK construction statistics

The Office for National Statistics has released the latest results for construction output in the UK. In November 2012, total construction output fell 9.8% y/y, with the September – November figure dropping by 9.1% y/y. During the three months, construction output from the private commercial sector declined by 16.2% and public housing by 19.5%. Although the volume of infrastructure work was down by 2.4% compared to the same period in 2011, it had grown by 12.1% when compared with the previous three months in 2012. The private industrial sector also showed signs of slight growth, increasing by 0.2% y/y.

Scottish construction market

According to RICS construction market survey for 4Q12, chartered surveyors indicated that they expected construction output to decline in Scotland in 2013. In 4Q12, surveyors saw workloads fall, particularly in public sector non-housing construction projects. Two thirds of respondents believed that there was insufficient demand and 95% suggested that financial constraints were preventing growth in the industry in spite of the introduction of the Funding for Lending Scheme.

On a UK-wide level, around half of the surveyors involved cited the bad weather as a reason for limited sector recovery. Although workloads fell in Scotland and in Northern Ireland, surveyors in London, the South East and North of England reported some growth.

“After a disappointing few months the sector is still struggling with the continued decline of reported workloads. Critically, competitive pressures in the sector remain intense which is continuing to erode profit margins,” said Sarah Speirs, Director RICS Scotland. “For the time being financing constraints are still an issue, however, the Scottish Government announcement in Autumn of an additional £394 million being made available for capital building and infrastructure projects in Scotland should aid growth in the sector.”

Adapted from press releases by Louise Fordham.

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