Construction output falls for third month in a row

According to the Office for National Statisitcs (ONS), GB construction output fell 1.3% in June, the largest monthly decline since December 2020 when output fell 2.2%.

Monthly construction output fell by 1.3% (£178m) in June 2021, because of a 4.2% decline in repair & maintenance (4.2%) offset by a 0.5% increase in new work.

Construction output in June 2021 was 0.3% (£39m) below the February 2020 pre-coronavirus pandemic level; new work was 2.1% (£188m) below this level, while repair and maintenance was 3.1% (£149m) above.

In contrast to the monthly fall, ONS data show that quarterly construction output grew by 3.3% in Quarter 2 (Apr to June) 2021 compared with Quarter 1 (Jan to Mar) 2021; both new work (3.9%) and repair and maintenance (2.3%) saw increases.

Total construction new orders grew by 17.6% (£1,998m) in the second quarter of 2021 compared with the first quarter. Total new orders recovered in Q2 2021 to above its pre-pandemic level for the first time at 1.6% (£214m) above the Q1 2020 level.

The annual rate of construction output price growth was 3.4% in June 202. This was the strongest annual rate of construction output price growth since August 2019 (3.5%).

Industry comment

Fraser Johns, finance director at Beard, said: “For output to drop for the third consecutive month to below pre-pandemic levels, should start to ring some alarm bells. As an industry we’ve been saying for months now that the pandemic bounce-back could potentially be scuppered by a combination of the serious materials shortage, rising prices, labour shortages and now not enough HGVs on the roads to supply building sites. It’s not the kind of prediction anybody wants to be right about, but today’s stats demonstrate that these issues are really beginning to bite.

“At the same time, it is encouraging to see quarterly levels of growth up 3.3% in Q2 compared to Q1, driven in part by new orders, but it is some way below the growth in the economy overall at 4.8%. And of course, that first quarter was spent still under lockdown.

“Right now, we have to work together with suppliers, surveyors, customers and consultants to be proactive about the issues we face and take a multi-step approach to things like procurement to manage our way out of this current decline.”

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