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Construction industry activity falls again

Official ONS figures reveal 3.3% decline in output year-on-year for July

Building firms and contractors reported falling orders in July, according to official figures for the construction industry from the Office of National Statistics.

The gloomy data will reinforce concerns of a looming double-dip recession after several sectors of the economy, including manufacturing and services, reported dramatic slowdowns in output and orders.

The construction industry has come under intense pressure following the government’s virtual freeze on school and hospital building and a collapse in demand from the retail industry this year.

The Office for National Statistics said non-seasonally-adjusted output was down by an annual 3.3% in volume terms in July. Volume was 2.8% down on the month, its biggest drop since April’s 12.3% decline.

Last week a survey of the sector for August by financial data provider Markit found construction companies continuing to shed jobs as they coped with a public and private sector spending squeeze.

Steve McGuckin, UK boss of construction consultancy Turner & Townsend, said the data raised further doubts about the sector’s underlying health.

“Certainly there is little to cheer about in these ONS figures, which show the volume of work down once again,” he said. “Total output is barely better now than it was at the start of the year – any early hint of momentum appears to have been lost.”

He added: “Confidence is being battered by people’s fears for the wider economy, and as new orders become scarcer, competition is intense.”

The ONS revised up its estimate for seasonally adjusted second-quarter construction output growth to 1.1% from 0.5%, but said this would not materially affect the GDP growth figure for the period.

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