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Slowdown in infrastructure worries contractors

The Civil Engineering Contractors Association (Ceca) today warned that a slowdown in the infrastructure sector is worrying news for the wider economy.

Figures published by the Office for National Statistics on output in the construction industry for November 2012 show the volume of infrastructure work fell by 7.8% to £1.03bn compared on a month earlier and 7.9% on the same month a year earlier.

Infrastructure output for the three months to November stood at £3.17bn, up 12% on the preceding three months but down 2.4% on the same three months one year earlier.

Commenting, Ceca director of external affairs Alasdair Reisner said: “Today’s figures have worrying implications for the wider economy.

“The government has rightly focused its recovery strategy on securing growth in the infrastructure sector. It is concerning that the general trend over the last year has been one of negative, rather than positive growth.

“Ceca hopes that recent efforts to stimulate immediate activity will bear fruit, both for the sake of our members and for UK plc. At the same time, these figures show that there is no room for complacency if the infrastructure sector is to act as a motor to kick-start growth in the economy.”

The figures are at constant (2005) prices and non-seasonally adjusted. They show that the total volume of construction output in November 2012 stood at £8.4bn, 3.4% down on October and 9.8% lower than in November 2011.

A more optimistic view has emerged from the Royal Institute of Chartered Surveyors (RICS), which claims that more of its members are predicting that output will increase in 2013.

However, 89% of surveyors believe that financial constraints are holding the industry back.

RICS chief economist Simon Rubinsohn commented: “After a truly dreadful year, if one believes the official data, there are signs that 2013 will bring some better news for the construction sector. Most notably, the numerous measures that the government has introduced with a focus on infrastructure appear to be bearing some fruit.

“Critically, competitive pressures in the sector remain intense which is continuing to erode profit margins. And for the time being financing constraints are still an issue although the Funding for Lending Scheme should gradually help to ease this challenge.”

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