Member Article

Construction orders languish, despite slight increase

New figures from the ONS show construction orders have increased very slightly, but remain at a depressed overall level.

There was a slight 0.2% rise in new orders in the first quarter of 2012, which was 11.1% up on the same period last year.

Infrastructure orders fell for the second consecutive quarter, while public work increased by almost a third.

Noble Francis, Economics Director at the Construction Products Association 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.”

CECA’s director of external affairs Alasdair Reisner said: “While today’s figures show welcome growth in orders for the construction industry as a whole, it is worrying that infrastructure orders have fallen steeply for the second consecutive quarter. This reverses much of the gains made during a mini-recovery for the sector last year, and throws into doubt the chances that new infrastructure will be able to support growth in the wider economy.

“Given the strong case for infrastructure investment as a route to rebuild the economy, it is essential that the government and industry work together to find ways to release new work as quickly as possible. With the publication of its report Infrastructure: the Routemap for Growth, CECA has set out the steps that must be taken to deliver on this strategy and achieve growth in the economy.

“CECA has warned that unless the government begins to address the infrastructure crunch its members are facing, the sector will continue to act as a drag upon the wider economy.

“It is vital that the government acts to give the economy the shot in the arm it requires, by providing immediate short-term funding to boost shovel-ready repair and maintenance activity, rebalancing infrastructure investment across the UK, and ensuring that appropriate finance and funding models are in place to meet future infrastructure needs.”

This was posted in Bdaily's Members' News section by Tom Keighley .