Industry experts warned the increases were still dependent on spending by the public sector on social housing, education, health and infrastructure with little sign of a recovery in the private sector.
Noble Francis, Economics Director of the Construction Products Association said: “Although the final quarter highlighted an 18% rise in new orders, the extent to which this is reliant on the public sector is still extremely concerning given the sharp cuts in public spending outlined in the Comprehensive Spending Review that will occur after April.
“Public housing orders were 69% higher than during the fourth quarter compared to the third quarter. Orders for public non-housing, which includes education, health and work on the Olympics, rose 29% during the final quarter and infrastructure orders rose 37% over the same period.
“While commercial and private housing orders remained flat, orders for industrial factories and warehouses rose by 14% during the final quarter of the year yet, overall, orders for construction work in 2010 as a whole still remained at 2009 levels.
“Given the extent of the public sector cuts it is essential that private sector construction picks up.
“The Association has made a number of suggestions regarding this in advance of the Budget, such as reducing VAT on repair and maintenance work valued less than £10,000 and work that improves the Energy Performance Certificate rating of a property by 10 points.
“Measures such as this clearly indicate how construction can help to drive economic growth and rebalance the economy at a time when public finances are constrained.”
Alasdair Reisner, CECA director of external affairs, said: “While today’s figures for construction orders are welcome, indicating growth in new work for the industry of around 18 per cent on the previous quarter, it must be remembered that these figures are being compared with the period that followed the General Election where many decisions were put on hold.
“The impact of this hiatus is clear to see in the previous Q3 2010 order figures where falls in public sector account for a large proportion of the overall decline in new work won.
“And the orders figures for the industry in Q4 2010 are still around 10 per cent lower than the levels typically experienced in the decade running up to 2007, when the first impacts of the slowdown in the economy started to hit the industry. This means that, while the improvement in orders will provide support to the industry, there is still a long way to go if it is going to recover fully.
“Unfortunately these figures also don’t reflect the impact of the forthcoming cuts to public sector spending. When these do kick in later this year, there is a question mark over whether private sector construction investment will be able to overcome these falls. If not, the sector will continue to face difficult trading conditions for some time to come.
“CECA is now looking to next week’s Budget as an opportunity for the government to offer support to the private sector, providing measures in areas such as planning and regulation where existing policies act as barriers to development.”
