Output falls 4% month-month but longer-term trend remains positive

Liveprool Street site

The construction industry鈥檚 recovery stalled slightly in November, with output falling 4% month-on-month, although the overall trend remains positive, the latest official growth figures have revealed.

The Office for National Statistics construction output figures for November 2013 showed output fell 4% when comparing November 2013 with October 2013, with the fall driven by a 7.1% decline - equivalent to 拢140m - in commercial work. There was also a 3.2% month-on-month fall in private new housing and a 4.8% fall in new infrastructure.

When comparing the three months to November with the previous three months output was relatively flat, with growth of 0.7%.

However, the longer-term growth picture remained positive, with output up 2.2% when comparing November 2013 with November 2012, the sixth consecutive month of year-on-year increases.

Year-on-year growth was driven by a 14% spike in private housing and a 20% increase in public sector housing, while commercial work, construction鈥檚 largest sector, was up 6.4%.

When comparing the three months to November with the same period a year ago, output was up 5.1%.

Simon Rawlinson, head of strategic research and insight at EC Harris, said the figures were 鈥渄isappointing鈥.

He added: 鈥淭he figures are a useful reminder that recovery will not be a smooth progression.

鈥淒espite the lower level of activity recorded in November, the medium term rate of growth has been sustained.

鈥淕iven talk about shortages of labour and material - a steady, sustained rate of growth is what the industry needs - so let鈥檚 not take one month鈥檚 strong or weak data out of context.

鈥淲here today鈥檚 data could have [an impact] is on 4th Quarter GDP - which may not end up being quite as sparkling as some analysts have suggested.鈥

Steve McGuckin, UK managing director of Turner & Townsend said: 鈥淭he industry grew steadily in the second half of 2013, so the news that its momentum faded a touch in November is a surprise rather than a shock.

鈥淪uch a modest dip in monthly output is unlikely to interrupt the construction industry鈥檚 upward trajectory.

鈥淭he 3.2% month-on-month decline in private sector housebuilding comes after stellar performance in preceding months.

鈥淭he quarter-on-quarter numbers continue to march upward, and the pipeline of new orders remains strong.

鈥淐onfidence is buoyant too - and last week鈥檚 PMI survey showed that sector sentiment remains close to the six-year high it posted a month before.

鈥淗eadhunters tell me they鈥檙e busy again as the industry鈥檚 big players seek to hire the best talent. And where senior level recruitment leads, more junior jobs will follow.

鈥淭he industry has long experience of riding out the peaks and troughs of the economic cycle. Its best players are steadily rolling out their latent capacity to meet growing demand.

鈥淩apid expansion after such a long lean period means some growing pains are inevitable, but with careful cost planning, the business risk associated with growth can be mitigated.

鈥淣ovember鈥檚 surprise dip is a minor distraction for a newly confident industry - for most of us, it remains a case of 鈥榙on鈥檛 panic and keep digging鈥.鈥