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19th June 2012
Though the value of construction output fell over the first quarter of the year, the value of public non-residential repair and maintenance has increased year-on-year for the third quarter in a row. As less money is available for new builds, it seems this different type of work is becoming increasingly important.
The value of construction output fell by 4% during the first three months of 2012 compared with the same period a year ago, according to the latest release by the ONS.
Unsurprisingly, it was the social housing, education and health sectors which saw the largest declines in output.
However Glenigan data showed that the value of social housing starts actually increased over the first three months of the year, and the large projects which we saw coming through this year are repair and maintenance (R&M) contracts.
There has been a similar trend in non-housing sectors too. When looking at publicly funded non-housing output, it is clear that this year has seen R&M becoming increasingly important. In 2010, R&M accounted for 26% of the value of publicly funded output. Over the first three months to this year the figure had risen to 31%.
It is not only R&M work which has become increasingly important to the public non-residential sectors. Glenigan have tracked a rise in refurbishment and extension projects – many of which count as ‘new work’ in the ONS figures.
This has been particularly prevalent in the education sector. The reduction in the value of education related output comes after of two years of broad decline in the value of project starts. Less money is being spent on new education builds, though we have tracked a rise in the value of refurbishment and extension project starts. We expect this trend to continue, and accordingly expect to see such projects accounting for a higher share of output in the future.
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