Out-Law News 2 min. read
16 Apr 2013, 9:10 am
The Office for National Statistics (ONS) (15-page / 123KB PDF) reported a 23.7% drop in new public sector contracts for buildings such as factories, warehouses, schools and offices over the three months from December 2012 to February 2013, when compared to the same period in 2011-12. New orders for similar projects in the private-commercial sector decreased by 8.9% over the same period, the ONS said.
The total volume of construction output increases by 5.5% over the month of February when compared to January 2013, the ONS said. It reported increases in output for all types of work, other than private commercial work. The largest increase was in new public housing work, which rose 18.5% between January and February, according to the figures.
Some industry experts said that the increase in output between January and February masked an "underlying trend" in the construction sector, with Noble Francis of the Construction Products Association blaming poor weather for particularly poor performance in January. However, the chairman of plant manufacturer JCB said that the firm expected to see the UK market rebound later in 2013 after a "satisfactory" start to the year.
"In view of the continued fragility of the global economy, which has led to renewed slowdowns in emerging and developed markets, JCB's results in 2012 are extremely encouraging," Sir Anthony Bamford said. "They not only demonstrate the resilience of our business, but highlight the important of continued investment in products, facilities and customer service."
The firm reported record earnings of £365 million in 2012, against turnover of £2.7 billion. Bamford said that JCB's business in Africa doubled last year, while business in the Americas increased by 20%. The company also retained its position as the number one construction equipment manufacturer in the UK, Europe and India, he said. The firm intends to open its fourth manufacturing plant in Jaipur in 2014, he said.
"While construction equipment markets in many parts of the world remained weak, that has been more than offset by strong growth for our agricultural products, particularly in materials handling," he said. "Despite continued uncertainty, particularly in European economies, 2013 has started satisfactorily. We are expecting some growth this year but how much will depend on the pace of the global recovery."
Infrastructure law expert Martin Harman of Pinsent Masons, the law firm behind Out-Law.com, said that India was experiencing a similar slowdown in construction output. However, the country needed to "urgently" address gaps in its infrastructure, particularly in power and transportation, if it wanted to achieve its target of becoming an international economic power, he said.
"With an election coming up next year, the incumbent Congress Party is focussing more attention on its domestic agenda towards its traditional support base in the rural communities," he said. "Once the election is over in 2014, we can expect the attention once again to shift to infrastructure and, whichever party succeeds, there will be an overwhelming need to combat the infrastructure deficit."
"Not only can we expect more public money to be channelled to infrastructure, but the investment climate for international financiers will be improved to encourage private sector investment as well. Accordingly, whilst the short-term outlook for the construction industry is poor, the medium term is far more rosy," he said.
