Half empty or half full?

As another year draws to a close, the fortunes of the industry have been mixed. Current output in construction is declining at present, with the latest figures from the Office for National Statistics showing a fall in output in the three months to October of 1.4%, compared with the previous three months. This follows on from a decline over the whole of Q3 2017 of 0.7%, with services and manufacturing both increasing in the same time frame.

So what conclusions can be drawn from these latest disappointing output figures? It would be easy to be negative about the state of the industry, based on these figures alone. For many in construction, the dark days of the 2008 recession and the 2012 “double-dip” recession were a very painful time, so it is not surprising that the official statistics are causing many to be concerned. But should they be? The answer is that it depends which part of construction you are involved in. 

What is different now compared with 2008 is the presence of the government schemes to underpin demand in the housing market

Repair and maintenance work for example, in both housing and non-housing, fell in the three months to October by 3%. If you consider this in the context of falling new car sales, for example, it does provide evidence of consumer spending falling back, which is often the precursor of a recession, particularly in the UK.

However, what is different now compared with 2008 is the presence of the government schemes to underpin demand in the housing market. So while there may be a slowdown in the general housing market, the fundamentals in the new-build market remain strong, which should prevent a collapse in housebuilding similar to the one in 2008. And indeed the latest figures provide support for this theory since output in private new housing increased by 2.7% in the three months to October 2017.  

Outside housing it is a bit of a mixed bag, but on the positive side a lot of high-value infrastructure orders are due to begin in 2018, providing a large pipeline of work for contractors. The HS2 contracts alone total about £6bn which will help support output in construction in the coming years. Add to this the Transpennine railway upgrade, valued at about £2bn. It is your choice whether your glass is half full or half empty this Christmas.