Housing slowdown drags on construction output

Housing slowdown drags on construction output

According to the Office for National Statistics (ONS), November 2022 saw a 0.6% rise in the value of repair & maintenance work carried out across Great Britain but this was offset by a 0.4% fall in new work – resulting in overall construction output growth of 0.0%.

This follows a downwardly revised increase of 0.4% in October 2022.

Growth sectors in November included infrastructure new work (up 4.2%) and non-housing repair & maintenance (up 2.4%).

The laggards were private new housing (down 4.8%) and private housing repair & maintenance (down 1.7%).

In the three months to November 2022, construction output saw an increase of 0.3%, with a  1.3% growth in new work offset by a 1.2 fall in repair & maintenance. However, the previous three-month period – June to August – included the Queen’s platinum jubilee national holidays. The numbers are stilted by the two working days lost in June, the ONS said.

320x311.77142857143 1673596614 figure 1 the monthly all work construction output index in november 2022 saw flat growth on the month coming from a decrease in new work 0.4 offset by an increase in repair and m

ONS statisticians report that anecdotal evidence received from returns for the Monthly Business Survey for Construction and allied trades (MBS) suggested that the rising prices of construction products has become less of a worry than in previous months.

 “However, more businesses are starting to further reference economic worries leading to customers delaying or cancelling work than in previous months,” the ONS bulletin says.

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“To a lesser extent, additional comments mentioned heavy rainfall throughout November 2022. The Met Office confirmed in their monthly climate summary that rainfall was above average and businesses cited that for the construction industry, the rain caused difficult working conditions. However, for some businesses the rainfall generated more work relating to repairs.”

Mike Hedges, director of southern England regional building contractor Beard, commented: “After three months of just 0.3% growth, the flattening of construction output in November comes as no surprise and may well herald a further decline in the coming months. The sector has long been expecting – and preparing – for this to trend.

“Behind the headline figures, however, construction output seems to tell a tale of two sectors.

“The levelling off is very much driven by significant falls in new housing and private housing repair and maintenance, which may be more directly related to wider pressure on the housing market from recent interest rate hikes.

“Conversely, infrastructure new work and non-housing repair and maintenance continued to grow at significant levels – 4.2% and 2.4% respectively.

“In other words, investment in housing construction seems to be contracting much faster than commercial work and the fact that there is still some growth in the sector provides an element of reassurance. In addition, concern around the cost of materials is also less notable with energy costs starting to stabilise during Q4, 2022.

“However, the figures tell us that economic conditions are tightening and the sector has been right to prepare itself for some contraction in the forthcoming period ahead. As a sector, we must remain agile in responding to evolving market conditions, while upholding our values in delivering quality for our customers and continuing to pay suppliers promptly.”

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