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Editorial

Watts Bulletin (issue 127)

Welcome to the March issue of the Watts Bulletin. According to a report in Building earlier this month, the current outlook for construction is very much a tale of two industries. The latest company reporting round reveals that the major construction firms are doing well – order books are healthy and margins beat forecasts. However, the smaller contractors continue to face falling revenues and are shedding staff, as highlighted by figures just released by the Office for National statistics for the fourth quarter of 2010. As we report elsewhere in this issue, the construction sector will be holding its breath to see what the output figures for February will reveal: construction on the up or a downward slide back into recession.

Watts Bulletin (issue 127)

Will spring signal a new dawn for construction?

Construction output in January fell below that recorded in December according to the latest figures from the Office for National Statistics (ONS). However, industry commentators are cautiously optimistic that this is not the true picture and believe the poor results may still reflect the unseasonably cold winter weather during November and December. It is hoped that January’s results simply represent a reporting time lag, rather than indicating a downward spiral back into recession and that February will indicate a positive improvement.

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The ONS figures for January, published in March, show that less work was undertaken in January than in December with the value of output calculated at £6.9 billion compared to December’s figure of £7.5 billion. Construction jobs too fell by 8,000 in the fourth quarter of 2010 with redundancies up by 11,000 on 2009 figures (source: ONS). However, more positive is the news that the number of construction insolvencies fell in January and that the financial strength of UK business is growing (source: Experian).

Some new work may be generated by government initiatives such as the new Carbon Plan which promotes renewable energy installations and improved insulation for both commercial and residential property. However, there is still concern that the industry remains too dependent on public sector work. With funding cuts making an impact on budgets this year, it is vital for the construction industry to gain work via private sector projects. The Construction Products Association is calling on government to reduce VAT on repair and maintenance work valued at less than £10,000 and on work that improves the Energy Performance Certificate (EPC) rating of buildings by 10 points. The Association’s Economics Director Noble Francis says:  “Measures such as this clearly indicate how construction can help drive economic growth and rebalance the economy at a time when public finances are constrained”.

For more information go to www.statistics.gov.uk

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Watts Bulletin editor: Trevor Rushton.

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