Growth continues despite pressures

The latest ONS data has reported a 1.5% increase in construction output, delivering the seventh month of consecutive growth for the industry.

While these figures show that the industry remains in growth, the increase in monthly output came solely from an increase in new work, with repair and maintenance seeing a decline.

Looking at sector level, May’s growth was driven by private commercial new work and private new housing, which increased by 12.1% and 7.2% respectively.

Output levels remain solidly above pre-pandemic levels, at some £598M above the February 2020 figures.

Across the industry, recovery from Covid-19 is mixed; infrastructure is registering some 19.0% above February 2020, while private commercial is 21.2% below its February 2020 level.

Quarterly growth steady

Over the quarter to May, construction output increased by 3.0%, led by growth in new work and repair and maintenance. This is the seventh consecutive growth in the three-month on three-month series, and the largest growth seen since June 2021.

Costs rising

Comments from the industry taken from the Monthly Business Survey for Construction and allied trades and the Business Insights and Conditions Survey (BICS) dataset focussed on problems with product sourcing and supply chain delays.

Products such as concrete, bricks and timber are mentioned as high cost. There are also ongoing shortages of many materials, with smaller businesses in particular being affected. While higher fuel costs and VAT tax increases for red diesel are a concern for the industry.

Sector growth

Private industrial new work has been going from strength to strength, when compared with the previous year. Changes in consumer shopping habits has led to a rise in need for warehousing space and distribution centres.

Reports from the industry suggest that the increase in private commercial sector comes from a rise in offices. New orders data shows a 38% rise in Quarter 1 2022, which is linked to office space refurbishments, as employees have been returning to offices.

Early warning

Brian Berry, Chief Executive of the Federation of Master Builders (FMB) said that while the latest figures were positive, then data from repair and maintenance should be seen as an early warning to to the rest of the industry and the government.

He said: “The positive numbers in the latest ONS stats mask a worrying underlying trend. Activity in the repair, maintenance and improvement sector (RMI) continues to fall, likely influenced by consumers juggling rising cost of living pressures. RMI work is the backbone of the construction industry and the lifeblood of small, local builders. If the decline continues, insolvencies will follow.

“The ONS is right to point to the pressures of high costs of construction products, lack of materials, high fuel costs and the ban on red diesel as having an impact on the sector. All these costs add up and must be passed on to a reluctant customer base who are looking to make savings.”