Construction output slips in October

The government is facing calls to scrap its skills-based immigration system as new data showed construction output dipped in October.

Construction output in the UK fell 0.2%, compared with a 1.7% rise in September, with falls in activity across public housing and infrastructure sectors helping to depress overall construction output, according to new data from the Office for National Statistics.

The ONS said output public new housing fell 8.1%, infrastructure was down 3.7% and total repair and maintenance was off by nearly 1%. The only significant increase was private new housing, up 2.4%.

Sarah McGonagle, external affairs director the Federation of Master Builders, called on the government to scrap its proposed skills-based immigration system post-Brexit, replacing it with one “that allows us to draw on essential migrant workers. Without this, we won’t be able to keep building at the current rate and construction output will continue to fall.”

The residential sector’s ability to defy Brexit headwinds was waning, according to Blane Perrotton, managing director of property consultancy and surveyors Naismiths.

Noting that new orders for resi developments shrank by a quarter between the first and third quarters of 2018 and after a generally good summer for the sector Perrotton said the dip was “symptomatic of an industry which has been starved of the oxygen of confidence”.

Meanwhile, companies large and small were feeling the double pinch of rising wage costs and increasing raw material prices, according to the FMB’s McGonagle, with the depreciation of sterling following the EU referendum seeing key materials becoming more expensive, she said.

“We are expecting material prices to continue to squeeze the margins of construction firms with recent research from the Federation of Master Builders showing that almost 90% of builders believe that prices will continue to rise in the next six months.”

The ONS also reported UK GDP grew by 0.4% in the three months to October 2018.

On a rolling three-month basis the construction sector grew 1.2%, it added.