Construction output increases 2%

Construction output increased 2% in the third quarter of 2009, signalling the beginnings of a recovery in the sector.

However, experts warned the figures mask the gap between repair and maintenance work and new build, which continued to fall in the three months to 30 September.

Figures from the Office for National Statistics show repair and maintenance was up 10% in the period compared with the previous three months, while new work fell 4%.

Meanwhile, the total volume of construction output in the 12 months to the third quarter was down 11% on the previous year.

Non-housing repair and maintenance fared best in quarter three, leaping 26% compared with the previous three months, in spite of a 1% fall over the year.

New public sector work, excluding housing and infrastructure, also performed well. Output in the sector was up 7% quarter-on-quarter and 25% over the 12 month period. New infrastructure output was down 3% on the previous quarter but showed a 7% rise over the year.

Private housing continued to decline, falling by 12% compared with the second quarter of the year while private commercial and industrial work slipped 4%. However, new public housing work was up 14% quarter-on-quarter.

Commenting on the figures, RICS chief economist Simon Rubinsohn, said: “The 2% gain in the headline output number in the third quarter masks a significant divergence between new build and repair and maintenance work. While output of the former continues to slip, the latter has now increased for two consecutive quarters.”

He added: “The contribution from private housing and commercial developments was particularly disappointing, demonstrating the continuing problems facing the industry as a result of a lack of development finance.”

The RICS is calling for reduction of VAT to 5% for repair and maintenance work as the improvement of existing stock becomes an increasingly important source of work for the industry.