Construction News

Fri June 18 2021

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Construction fails to sustain rapid growth rate

6 days Construction output in Great Britain fell 2.0% in April 2021 following its strong 5.8% increase in March.

Latest numbers from the Office for National Statistics (ONS) show that output now stands slightly above its pre-pandemic February 2020 level.

New work continues to be subdued but the level of repair & maintenance is stronger.

Monthly construction output fell by 2.0% in April 2021 compared with March 2021, falling to £13,961m, and was the first month-on-month fall since December 2020 when output fell by 2.2%. New work was done 2.9%, while repair & maintenance was down 0.6%.

The level of construction output in April 2021 remains 0.3% above the February 2020 pre-pandemic level despite the monthly fall. New work was 3.4% below the February 2020 level; repair & maintenance work remains 7.1% above the February 2020 level.

In contrast to the monthly fall, construction output grew by 5.1% in the three months to April 2021 compared with the previous three-month period, because of a 5.2% increase in new work and 4.9% increase in repair & maintenance.

Clive Docwra, managing director of property and construction consultancy McBains, commented: “Output falling by 2.0% in April is a cause for concern for the construction sector, but may reflect the fact that growth over March was higher than expected.

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“Today’s figures also show that although confidence is returning to the construction sector, this remains delicate and growth in specific work sectors is mixed.  While overall output remains just above pre-pandemic levels, driven by an increase in repair and maintenance work, new work contracts declined which bucks recent growth trends.

“Private new housing work was the largest contributor to this fall, which will pose a risk to the government’s housebuilding targets.”

Gareth Belsham, director of surveyors Naismiths, said: “Growth stumbled in April but in an industry already at a full sprint, few will be concerned. Even with April’s surprise decline in output, overall construction activity is still higher than its pre-pandemic level and sentiment remains very strong – with many builders’ order books looking healthier than they have done in years.

“Nevertheless April’s fall will have served as a reality check. Private sector housebuilding, which has roared back since the start of the year, saw output dip by 11% compared to March.

“Fortunately infrastructure work moved by the same amount in the opposite direction, but such volatility reveals the mixed fortunes within an industry grappling with severe supply side issues. Average wages are rising as employers fight to lure workers, and material costs are surging as demand far exceeds supply. The difficulty of getting hold of key materials like steel and timber risks knocking existing projects off course and is pushing up tender prices for future work.

“But frustrating though these issues are, they are growing pains for an industry well versed in handling boom and bust. The phenomenal rate of growth seen in the early months of 2021 was always going to be hard to maintain, and overall things are settling into a better rhythm.

“While April’s month-on-month fall is disappointing, the 5.1% quarterly rate of expansion is a huge achievement and the industry’s recovery from a punishing 2020 remains broadly on track.”

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