UK: latest construction new orders remain depressed

The latest quarterly Office of National Statistics (ONS) figures for UK construction new orders released today show that new orders for construction remained at a depressed level in the second quarter of 2012, despite having risen 1.5% in the first half of 2012 compared to the same period one year earlier. New orders remain 40% lower than the pre-recession peak.

Commenting on the new orders data, Noble Francis, Economics Director at the UK’s Construction Products Association (CPA) said: “The adverse effects of the public sector cuts are clearly highlighted in these ONS figures. New orders for public housing in the first half of the year were 24% lower than a year earlier and orders for public non-housing, which covers education and health, were 19% lower than a year earlier.

“The picture is brighter for infrastructure, where new orders in the first half of the year were 47% higher than a year earlier and this will feed through over the next few years through large projects such as Crossrail and Thameslink. However, this is not enough to offset the fall in orders in the public sector.  In the private sector, new orders for commercial construction rose 1% in the first half of the year, which points towards a subsequent rise in output in 12-18 months’ time, given the long lead time in the commercial sector.

 “With new orders at such historic lows, it is imperative that government does more to stimulate construction and the economy.  Despite numerous announcements and initiatives from government over the past 12 months, the private sector recovery remains sluggish, as public sector investment falls sharply.  The economic recovery will only return when investment is made, therefore government must decide its priority between its current and capital spending whilst at the same time provide a robust model to attract private finance."