Last month the Office for National Statistics told us that construction output had risen in the second quarter of 2010, this month they tell us that construction new orders in the same quarter fell by 14% compared with the first quarter of 2010 and by 9% compared to the same period in 2009.
We have also seen the Construction Products Association publish their latest forecast. They expect a rise of 1.3% in output in 2010, a fall of 0.8% in 2011 followed by modest growth in the following 3 years. They expect RMI to fall during this period while new work will increase. Prospects in housing will also be mixed with private increasing and public declining. The commercial and industrial sectors are expected to make a recover in 2011.
Supporting the optimism concerning the commercial sector, the August 2010 Commercial Property Review published by Knight Frank expects the second half of the year to be quieter than the first. In their London Office Review they say that following two quarters of exceptionally strong take-off there was a fall back in Q2 of 2010 which can be seen as a pause for breath with demand for quality stock and large units remaining strong. Another wave of demand is anticipated towards the end of the year.
Anecdotal evidence from surveyors cited in the RICS Q2 Construction Market Survey suggests the key issues facing the sector are the continued lack of development finance, public spending cuts (notably the suspension of the BSF programme), insufficient clarity provided by the new government on existing projects (creating even more uncertainty amongst developers) and an overall increase in competition (as larger firms are now bidding for smaller contracts).
Watch this space as the October Spending Review moves closer, hopefully bringing some clarity to the situation.
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Chris Ashworth, founder of Competitive Advantage Consultancy, provides strategic marketing, research and training services to the construction industry. He is a member of the organising committee for the Chartered Institute of Marketing Construction Industry Group (CIMCIG). |
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