'Grim' outlook for building industry as orders fall

Britain's building industry was facing a bleak future today after construction orders suffered a dramatic 14% fall between April and June.

The slide was led by public and private housing orders - down 23% and 24% respectively - and is the biggest slump outside of a recession over a single quarter since 1987.

The Office for National Statistics (ONS) figures come despite construction output soaring 8.5% during the second quarter - the sector's best performance since 1982.

The sudden fall sparked grim warnings from the industry over the rocky road ahead as Chancellor George Osborne's savage spending review looms next month.

Construction Products Association economics director Noble Francis said: "Today's figures clearly highlight that the increase in construction output during the second quarter does not represent a sustained recovery."

Alasdair Reisner, industry affairs director at the Civil Engineering Contractors Association, added: "This is a reality check for the industry. It's pretty grim out there."

Although the ONS stresses that the figures can be volatile, construction orders have held firm above £13 billion for the previous three quarters before the sudden plunge to £11.6 billion.

A host of building projects have been put on hold or scrapped since the election - including schemes under the Government's Building Schools for the Future project - with more likely to feel the axe next month.

The spending uncertainty has hit companies such as social housing and maintenance firm Connaught.

The ONS figures showed orders falling across all sectors except private sector industrial projects.

Public sector infrastructure orders - such as roadbuilding - were down 22%, the biggest fall since 2004.

The gloom comes after the Chartered Institute of Purchasing and Supply's latest activity survey for August showed construction growth slowing for a third successive month, with housebuilding much weaker than commercial construction and civil engineering.