–UK Q2 New Construction Orders Fall 14.0% Q/Q, -9.0% Y/Y
–Austerity Starts To Hit Public Infrastructure Orders

LONDON – The total volume of new construction orders slid in
Q2, despite strong gains in private commercial demand, as public
expenditure on construction fell back sharply and private housing orders
also dropped, according to data from the Office for National Statistics.

Overall new construction orders fell 14% on the quarter and dropped
9% on the year, the data show.

Private housing orders dropped 24% on the quarter and rose 7% on
the year. Public housing orders fell 23% in Q2, but rose 12% on the
year.

Public and private infrastructure orders fell 22% on the quarter
and also fell by the same amount on the year.

Public non-housing orders (excluding infrastructure) orders fell by
13% in Q2 and were 17% down on a year ago. Private commercial orders in
the second quarter of 2010 fell by 7% compared with the previous quarter
but rose by 4% on the year.

Private industrial orders rose 26% in the second quarter but
dropped 13% on the year.

Commenting on the data, Philip Rush, UK Economist at Nomura, said
that these weaker data are unlikely to have a bearing on Q2 GDP data.

“I don’t think this necessarily impacts (GDP). It’s the output data
that’s explicitly included in GDP,” he said.

“So the orders weakness there would be indicative of weakness into
Q3, which is something that you’d expect given the very strong growth we
found in construction output in Q2,” he added.

Rush said that the government’s decision to cancel public sector
building projects could take public infrastructure orders back to 2008
levels and weaken activity through Q3:

“I think there is quite a high likelihood that you could see
the infrastructure new orders decline to those 2008 levels in Q3. Those
school building projects that have now been cancelled had been a boon
for civil engineers and architects and I think you’ll see further
negativity coming out of that”.

–London newsroom: 4420 7862 7492; email: wwilkes@marketnews.com

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