Building intelligence Q2 2005: Ups and downs

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Construction was a mixed bag in the second quarter of this year, reports Experian Business Strategies, as new work orders went up 12%, output dropped 13%, London’s R&M output declined and everywhere else’s increased …

According to the latest DTI figures, total construction output reached £20.1bn in the second quarter of 2005. In the first half of the year output was a marginal 0.8% lower than in the first half of 2004. This decline was solely driven by a 2% fall in new work output. A 1% increase in repair and maintenance output cushioned the severity of the overall fall.

Total new work orders reached £8.3bn in the second quarter, up 11.8% from the second quarter of 2004. Orders were 4.9% higher in the first half of 2005 than in the corresponding period of 2004.

The strength of orders was primarily due to robust growth in the infrastructure sector, with orders in the first half of 2005 superceding orders in the first half of 2004 by nearly 50%. A similarly robust rise was recorded in the industrial sector, in which orders increased 35%. Conversely orders declined in both public housing and public non-residential construction and in the private commercial sector.

The infrastructure sector was also predominantly responsible for the decline in new work output over the first half-year – sectoral output was 13%, or £396m, less than in the first half of 2004. A 7% decline in public non-residential output contributed to the overall fall. Output in the public housing and commercial sectors also declined but had a lesser overall impact.

The public sector drove growth in repair and maintenance output over the first half of the year. The star performance came from the public non-residential repair and maintenance sector, which rose 7% to £3.6bn. Public housing repair and maintenance output rose at a slightly slower 5%. By contrast repair and maintenance output in both the private housing and private non-residential sectors declined 4% and 1% respectively.

Regional new work orders

Orders increased in 12 regions in the second quarter of 2005. The most robust rise was in Scotland, where orders were 42% higher in the second quarter of 2005 than in the second quarter of 2004 and were up by 26% from the first quarter of 2005. A quarterly orders level of £1.2bn in the region was only surpassed by orders in London and the South-east. The latest figures also report strong growth in the South-east.

In year-on-year terms, the largest fall in order levels occurred in East Anglia, which declined 36%.

Regional new work output

Higher new work output was recorded in six major regions in the second quarter of 2005 than in the second quarter of 2004. Output declined across the South-east as a whole despite increasing by nearly 6% in Kent, Surrey and Sussex. This fall was driven by a 13% drop in output in the Berks, Bucks, Hants and Oxon area of the region. The East Midlands performed strongly, as did the Beds, Essex and Herts area of the Eastern region, increasing by respective rates of 21% and 22%. London maintained its position as having the highest output level, despite declining slightly.

Regional R&M output

London was the only region to record a year-on-year decline in repair and maintenance output in the second quarter of 2005, falling 1.2% when compared to the fourth quarter of 2004. Output rose most significantly in the Beds, Essex and Herts area of the Eastern region, increasing 28%. Rapid growth of 25% was also recorded in the North-west in the second quarter, meaning repair and maintenance output in the first half of the year exceeded output in the corresponding period of 2004 by 21%.