Construction output volumes in Great Britain increased by 0.4% in September 2022, according to the Office for National Statistics (ONS).
This follows growth of 0.6% in August (revised upwards from 0.4% previously stated) and 0.2% in July.
In fact, September 2022’s construction output of £15,125m was the highest monthly total since records began in January 2010.
The increase in monthly construction output in September 2022 came from increases in both new work (0.6%) and repair & maintenance (0.2%) compared to August.
At sector level, the main contributors to the monthly increase seen in public housing repair and maintenance and infrastructure new work, which increased 11.3% and 2.8%, respectively.
The level of construction output in September 2022 was 4.0% (£575m) above the February 2020 pre-coronavirus (Covid-19) pandemic level. New work was 0.3% (£29m) below its February 2020 level, while repair & maintenance work was 12.0% (£604m) above the February 2020 level.
Across the third quarter of the year (July to September 2022), construction output increased by 0.6%. This was the weakest quarterly growth since the third quarter of 2021, which fell 1.1%. The quarterly increase came solely from growth in new work (2.4%) as repair & maintenance saw a decrease (2.2% fall).
Total construction new orders increased 6.4% (£774m) in Q3 2022 compared with Q2, mainly due to private commercial new orders, which rose 27.7% (£832m).
The annual rate of construction output price growth was 10.1% in the 12 months to September 2022. This has slowed slightly from the record annual price growth in May 2022 of 11.5%.
Construction lawyer David Savage, a partner at law firm Charles Russell Speechlys, said that although the numbers seemed like good news we shouldn’t get too excited.
“Construction output saw another increase in September – a third consecutive display of monthly growth – a sign that the industry is holding strong during an obviously difficult period. Although the cost of construction remains high, and further volatility over the medium term can be expected as the energy crisis bites harder, new work and increasing confidence across the sector seems to have carried some momentum over the last quarter,” he said.
“Nonetheless, while this is encouraging data for construction, it is a backwards facing view. With the certainty now of recession in 2023, and materially higher interest rates for the medium term, a significant number of developers and investors will be looking to press the pause button until the economic realities of inflation have become clearer
“It now remains to be seen how the sector reacted in October amid the political turmoil triggered by Truss’ mini budget and subsequent resignation.”
Clive Docwra, managing director of property and construction consultancy McBains, also predicts rocky times ahead.
“At a time when the economy is falling into recession, the construction sector continues to demonstrate resilience in the face of economic challenges with this increase in output, albeit moderate,” he said.
“Order books currently remain strong in many work sectors, and the 5% increase in new orders in private commercial work is a sign that confidence is still in evidence.
“However, given that the longest recession since records began is forecasted, it is inevitable the industry faces a rocky road ahead. Medium term growth is slowing, as indicated by today’s statistics showing the weakest quarterly growth for a year.
“Looking further ahead, as well as this meaning some projects being curtailed due to falling economic confidence, a major risk is that crucial efforts to decarbonise building stock could be sidelined. The government could help by giving the green light to a retrofitting programme, which will not only support the industry but help keep net zero targets on track.”
United Kingdom gross domestic product – a leading measure of the health of the wider economy – shrank by 0.6% in September 2022 and by 0.2% in the third quarter.
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