Fears of a prolonged recession in construction grew after both government and private sector analysts published a series of disappointing economic reports.
The Office of National Statistics showed that construction output fell 3.3% in Q4 of 2010. This is the largest drop since the height of the recession in early 2009, increasing fears of a double dip recession, Building reported.
Meanwhile, analysts Hewes and Associates published a downbeat outlook for the sector for the next three years, forecasting a drop in output of 3.5% in 2011 and 5% in 2012.
This comes after an Experian forecast earlier this month of a fall in construction output of 3.6% for 2011 and a 0.4% contraction for 2012.
Hewes also forecast a marginal contraction of 1.3% in 2013, although Experian predicted a return to growth of 5%.
Construction News quoted Construction Products Association economics director Noble Francis as saying the the news was “particularly bad” as the figures had yet to reflect public expenditure cuts.
“It is extremely concerning that these figures show the economy is falling when most people expected a slight rise in GDP.
“[Forecasters] had predicted a rise of between 0.1 per cent and 0.7 per cent in GDP for the fourth quarter. The figures are extremely harsh as a whole and a definite concern for the construction industry,” he said.
Also in Construction News, chief european economist at Capital Economics Jonathan Loynes described the figures as “shockingly bad”, and said the results would “raise serious concerns over whether the UK economy is in a strong enough position to withstand the coming fiscal tightening”.
But many commentators also attributed weak performance to poor weather conditions.
Confederation of British Industry chief economic adviser Ian McCafferty is quoted saying: “The magnitude of this preliminary estimate is a surprise, but much of the contraction appears to be the result of the very poor weather.”
And Glenigan economics director Alan Wilen predicted that construction output will enjoy a temporary boost as contractors press on with work delayed by December’s big freeze.
Alasdair Reisner, head of industry affairs at the Civil Engineering Contractors Association, told Building: “The weather [in December] has clearly had an impact but if there was underlying strength in the construction sector then the figures wouldn’t have been as bad.”
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