News No Need Panic Says Decorean Ons Figures Reveal Construction Output Slipped 07 Second Quarter 20

Despite UK construction output falling 0.7 per cent in the second quarter of 2016 and 1.4 per cent year-on-year, Shraga Stern, director at London-based construction firm Decorean, says there is no need for “any panic in the industry”.

June’s output fall of 0.9 per cent compared to May was a slightly smaller drop than expected, according to the latest figures released by the Office for National Statistics (ONS).

Output in the construction industry was estimated to have decreased by 0.7 per cent between April to June compared to the first three months of the year.

Downward pressure on the quarter came from all new work, which decreased by 0.8 per cent, and repair and maintenance which also dropped by 0.5 per cent.

The overall output in the second quarter of 2016 when compared with the same period in 2015 is estimated to have decreased by 1.4 per cent.

However, Stern believes the time of year and not the influence of Brexit is to blame for the dip.

Although construction output dropped by 0.9 per cent in June, we don’t believe there is a need for any panic in the industry,” he said.

“Historically, the broader industry experiences a dip in the summer months anyway, so we do not necessarily believe this has been caused by Brexit.

“In our day-to-day operations as a housebuilder, we have still seen an appetite and believe that other markets within construction will recover very soon.

“As is the case with any slowdown or dip in a market, patience is key. We firmly expect the entire market to recover as the year progresses.”

Darren Walker, bid proposal director at integrated property services group Styles&Wood group plc, is not surprised by the statistics.

“The latest ONS figures for construction output will come as little surprise to those who have been following the Markit/CIPS PMI for the sector over the past few months.

“However, the refurbishment and fit-out sectors are proving more resilient within the broader industry. The consequence of limited supply compared to demand in the commercial sector is continuing to bring forward opportunities. Growth is expected to continue as those with large estates continue to have to refresh and renew assets.

“There’s a particularly good appetite for the conversion of commercial buildings. Those with legacy Grade B stock are realising that the quantity of new modern schemes coming to market leaves their schemes vulnerable to low occupier interest.

“The continuing demand for housing in major urban centres is also providing a requirement for residential space which is, in turn, driving forward reconfiguration of buildings into living accommodation. The recovery of the leisure and tourism market is increasing the demand for hotel accommodation and the conversion of Grade B stock provides hotel owners and operators with an alternative to new build.

“Early indicators suggest that there is set to be an increase in investment across the shopping-centre retail and banking sectors, after relatively static growth over the past 12 months.

“Large-scale opportunities in the healthcare and education sectors are also coming to the fore through projects in private healthcare work and on national frameworks for education; universities across the country are maintaining investment in redevelopment projects, continuing to offer a strong pipeline of potential work into the sector.”

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