Construction output in the UK increases by 0.2%

Construction output in the UK hit a record high in March, despite poor weather conditions and weak performances in the housing and commercial sectors In March 2023, there was an estimated 0.2% increase in the volume of monthly construction output due to a 0.7% rise in new work, according to the latest ONS figures. Since records began in January 2010, construction output has reached its highest level of £15,616 million. This increase was partially offset by a 0.6% fall in repair and maintenance output. “The modest increase in output will provide a measure of good news for the construction industry, especially given a large proportion of work during the month would have been impacted by it being the wettest March for more than 40 years,” said Clive Docwra, managing director of property and construction consultancy McBains. Construction output varied across sectors Four out of nine construction sectors witnessed an increase in output. Infrastructure and public work were the main contributors to the rise. Infrastructure work increased by 2.2% (£51 million), and public work increased by 6.5% (£48 million). A rise in repair and maintenance output of 4.9% also contributed to an increase in quarterly construction output in early 2023. There has been continued strength within the repair and maintenance sectors across 2022 and early 2023, with all repair and maintenance sectors increasing in the quarter. “The private housing and commercial sectors are still weak, with the 0.2% increase in the output being largely down to other work sectors. The picture in the housebuilding market in particular is not surprising because although reports elsewhere show house prices are rising, which would normally trigger an increase in construction activity,” said Docwra, “Most developers are still planning to reduce by about a quarter the number of homes they planned, and further land purchase is also on hold until the economic forecast becomes clearer,” he added. The weather may have helped the repair and maintenance sector According to anecdotal evidence, adverse weather conditions in January 2023 increased the need for repair work. However, weather conditions improved in February 2023, which allowed for more work to be done in general. There was a 12.4% decrease (£1,571 million) in total construction new orders when compared to the previous quarter. This was largely due to a decline in private commercial and private housing new orders, which fell by 22.3% (£773 million) and 18.4% (£607 million), respectively. Six out of the seven sectors witnessed a decrease in total construction new orders in Quarter 1 2023, with the largest contributor being other new work new orders (non-housing) which fell by 9.7% (£874 million). Private commercial new orders saw the largest decline, decreasing by 22.3% (£773 million). This was due to falls in office and entertainment projects. Infrastructure decreased by 8.2% (£183 million). However, there was an increase of 11.1% (£177 million) in public new work new orders during the same period. Furthermore, the annual rate of construction output price growth was 8.5% in the 12 months leading up to March 2023. Although this growth rate is still high, it has slowed down slightly from the record annual price growth of 10.4% that was observed in May and June 2022.

For more information on Construction output in the UK increases by 0.2% talk to Nationwide Sureties