ONS construction output data a ray of hope for the industry?

THE ONS today published UK construction output data suggesting that December's clear election result, adding more certainty to Brexit, may be helping the industry to turn a corner.

Gareth Belsham, director of the national property consultancy and surveyors Naismiths, commented: “Fragile confidence, weak demand and contractors running out of orders – it’s all there. Rising output in infrastructure and commercial construction was tempered by a contraction in private sector housebuilding.

“Yet the month-on-month increase, which jumped to 1.9% – the highest level since January 2019 – gives a hint of the rebound that has followed the election. Such a clear election result and an end – for now – to Brexit uncertainty have helped the industry to reset. The return of clarity, if not yet unbridled confidence, is prompting many developers who spent 2019 sitting on their hands to pull the trigger in 2020.

“The industry is far from back to health, but in the space of less than a month, its newfound sense of purpose is starting to make these November figures seem very distant. The questions now will be how long the Boris bounce can sustain, and whether the capacity-cutting of last year will hamper contractors’ ability to cope with a rise in demand.”

Meanwhile, The Federation of Master Builders (FMB) said that the Chancellor must use the upcoming Budget to slash the rate of VAT on repair and maintenance work and to invest in the construction sector in order to maintain the industry’s recovery.

Brian Berry, chief executive of the FMB, said: “While 2019 was a year marked by political and economic uncertainty, there does seem to be some small signs of hope for the construction industry, with the largest monthly growth in the industry seen in November since the start of the year. It is too soon to tell whether this will be a longer term trend, as some sectors such as private house building and repair and maintenance continue to see sluggish growth.”

“The upcoming Budget provides the perfect opportunity for the Government to help ensure this positive trend at the end of 2019 continues into the new decade. In order to help boost the industry, the Chancellor should prioritise cutting VAT on home improvement works, so that tax isn’t a barrier to homeowners upgrading the energy efficiency of their properties. The Government should also use the Budget as an opportunity invest in construction skills to help build the homes and infrastructure we need, and invest in planning departments to ensure the planning system doesn’t act as a blockage to the Government’s ambitious housing targets.”

ONS; construction output; data; politics; Brexit; Gareth Belsham; Naismiths; The Federation of Master Builders; FMB;
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