Overall construction output expected to remain negative, says Pinsent Masons

04 Feb 2013 | 11:56 am | 1 min. read

Graham Robinson, Global Business Consultant at Pinsent Masons, comments on the Markit/CIPS latest PMI which signals moderate fall in output levels at the start of 2013:

"Expectations are that 2013 will remain negative for construction output as a whole, but there should be a turning point during 2013, as we start to see a recovery from a deep recession for UK construction.

"We should remember that any recovery will be from a significantly lower base, as UK construction output has slumped by over 20% in real terms since the start of the financial crisis.

"Housing is a significant part of the construction sector with all new housing work accounting for 25.9% of new construction in 2011.

"Without growth in housing, the outlook for UK construction sector is likely to remain negative this year.

"The private commercial sector is construction's largest sector, and in the three months to November 2012, it has fallen sharply by 16.2%, compared to the same period in 2011, leaving construction as a whole 9.8% lower than the year previous.

"It would be surprising if we saw a turnaround in the private commercial sector for construction at present, as the outlook for business investment still remains weak.

"It is of no surprise that Markit/CIPS is registering lower levels of activity in infrastructure as the new PF2 arrangements introduced by government late last year have yet to take any effect, and the outlook for investment in new infrastructure by institutional investors also remains weak.

"UK construction has lost around 400,000 jobs since the start of the financial crisis, so there is significant spare capacity within the sector."

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