Construction in recession as output falls in Q2

The latest quarterly data from the Office for National Statistics shows a downwards revision of the 0.4 per cent Q2 decline initially estimated last month.

Two consecutive quarters of negative growth mean that construction is now technically in a recession, after the ONS reported a 0.3 per cent quarter-on-quarter decline in Q1.

New work declined by 0.8 per cent quarter on quarter and 1.7 per cent year on year in Q2.

Across the sectors, public housing new work saw the largest quarterly and annual declines, at 6.5 per cent and 21.7 per cent respectively.

On a quarter-on-quarter basis, only three sectors saw an increase in activity in Q2: private industrial (7.3 per cent), public other new work (2.4 per cent) and non-housing R&M (0.9 per cent).

All other sectors reported a quarterly decline.

On a month-on-month basis, construction output fell by 0.9 per cent in June.

Output has only reported one month of growth so far this year, with a 2.9 per cent increase in April.

In June, only two sectors reported growth compared with May: public housing (1.2 per cent) and private industrial (1.9 per cent).

Year on year, new work was down by 1.9 per cent in June, while all work was 2.2 per cent lower.

The data tallies with findings from the Markit/CIPS Construction Purchasing Managers Index, which this month reported the fastest drop in output since June 2009.

The report found commercial building experienced its steepest fall in six-and-a half years, while civil engineering activity dropped for the first time in 2016.

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BDC 305 Jun 2023