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UK: CPA questions ONS construction output estimates

World Cement,

The UK’s Office of National Statistics (ONS) has released its statistical bulletin on construction output for 1Q15 and March 2015. In the January – March 2015 quarter, the ONS estimates that construction output contracted by 1.1% q/q and by 0.3% y/y. This would make it the first quarter to experience a y/y fall in construction output since 2Q13.

In April, the ONS forecast a 1.6% q/q drop in construction output in 1Q15. The estimate has been revised up to -1.1%, based on updated survey responses.

According to the ONS, new work declined by 1.7% q/q in the first quarter of this year, with decreases also reported for total housing (-3,4%), other new work (-6.6%), and private commercial work (-3%). Repair and maintenance is estimated to have dropped by 0.2% compared to 4Q14.

In March 2015, the ONS estimates that output was 1.6% higher than in March 2014 and 3.9% higher than in February 2015.

Commenting on the estimated 1Q15 decline in construction output, Stirling Ackroyd’s Andrew Bridges said: “New homes progress has been sluggish for decades, but the latest figures show this activity actually falling. Radical measures need to be put in place to support builders. […] This impasse isn’t just limited to housing either. Infrastructure matters too – and schemes like Crossrail demonstrate how this can pay for itself with the wider benefits and increased tax take. Britain’s cities are concentrated hubs of opportunity, but they need offices, homes, schools, roads and railways. Construction isn’t some kind of aside to the main show of economic growth – it is the primary limit and the main driver of progress.”

ONS figures contested by industry

The Construction Products Association (CPA) has questioned the figures released by ONS, releasing the following statement:

‘The Office of National Statistics (ONS) today reported falls in construction output for 4Q of 2014 and 1Q of 2015, suggesting that the construction industry has technically entered recession.

The Construction Products Association points out, however, that the official data contradicts a growing body of recent evidence from itself and other industry sources. Several independent organisations, including Experian and Markit /CIPS, have similarly reported growth in construction activity. These findings were reinforced this week by the Bank of England, which published its latest Inflation Report highlighting concerns with the comparative figures.

The Construction Products Association originally wrote to the ONS to raise this issue following the release, in April, of the original 4Q estimate. The CPA and ONS met in early May, and are currently working together to address this matter.’

According to the CPA’s 1Q15 State of Trade Survey, 50% of building contractors, on balance, reported a rise in construction output compared to 1Q14. Furthermore, 54% of building contractors noted an increase in private housing output and 23%, on balance, reported y/y growth in private commercial output.

Commenting on the State of Trade Survey, Dr Diana Montgomery, CPA Chief Executive, said: “Surveys from the CPA, wider industry and independent sources indicate that the UK construction recovery appears set to continue through 2015. Despite rising costs and general election uncertainties, enquiries and orders are clearly translating into activity on the ground and contributing to steady and consistent growth.”

Adapted from press releases by

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