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I will be shocked if construction is not in recession when the first quarter figures are published in a month鈥檚 time, given the official output data released last week.

Output in February was 4.6% down on the same month in 2011. What is more, we should expect to see bigger contractors squealing the most, as the markets they dominate seem to be under most pressure.

We could be looking at a drop in seasonally-adjusted construction output of more than 5% in the first quarter of this year to add to the 0.2% drop in the fourth quarter of 2011. If this does happen, it will catch many by surprise. There has been a rather unnerving level of optimism over construction. But the official data now suggests that public sector work is plunging after holding up well for months. There was an 11% drop in public sector building work comparing the three months to February with the previous year, and the private sector is struggling to fill the gap.

We should expect to see bigger contractors squealing the most

Output in January and February was down 3% on the same period last year. That was despite milder weather and the extra day in February. Adjusting for the leap day alone increases the drop to more than 5%.

My guess is that we should expect to see more 鈥渞estructuring for growth鈥� at big contractors, like Balfour Beatty has announced. I say this because the construction output figures provide a breakdown of work by size of firm. Bigger firms have the greatest exposure to the public sector - while firms with a turnover of more than 拢60m or with more than 100 employees have a market share of about 40% of all work, their share of public sector work is about 50%. Public sector work accounts for about 30% of their workload, which is much more than smaller contractors.

It should come as no surprise to find major firms trading ever more in markets normally serviced by smaller contractors.

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