New orders fall 14% in 2011

New orders in 2011 fell by 14% on the previous year, according to the latest government data.

The Office of National Statistics published fourth quarter new orders data this morning showing orders down 2.5%from the third quarter at £10.8bn.

That took the total new orders for 2011 to £43bn, 14% down on the £50.1bn recorded in 2010.

As expected the biggest year-on-year falls were recorded in public sector non-housing projects, with the volume of new orders collapsing 35% to £8.7bnbn in 2011. The value of new business also fell in commercial and industrial projects, with private housing the only sector to record an increase in starts in 2011, up 6%.

While new orders for infrastructure schemes rose sharply in the fourth quarter, new orders were also down over the whole year, by 17%. The Civil Engineering Contractors Association (CECA) warned that taking the fourth quarter figures on their own would “give a wrong impression of the current health of the infrastructure sector.”

Alasdair Reisner, director of external affairs at CECA, said: “For many contractors, including those serving local communities and specialist markets, the outlook for orders remains extremely poor.”

Simon Rawlinson, head of strategic research at EC Harris, said: “A stable headline figure for new orders masks the continuing decline of the public sector as a client and lower than expected level of activity in the commercial sector. Orders in real terms were £7 bn down on volumes recorded in 2010. The signs are not positive for 2012.”

However, the figures were in contrast to positive February data from the Chartered Institute of Purchasing and Supply’s monthly construction index, which hit its highest figure since March 2011. It said growth in new business was the fastest in 21 months, pointing to a rebound since the start of the year, with housing, civils and commercial sector all registering growth in output.

Andrew Duncan, director of property at the programme management and construction consultancy Turner & Townsend, said of the data: “The stock markets began 2012 in bullish mood, and this data gives the most encouraging sign yet that this confidence is filtering through into the construction industry. 

“February’s jump in both output and new orders will give a further shot in the arm to construction sector confidence, which the data shows is at a nine-month high.”