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January output fall blamed on rain

10 Mar 23 Construction output fell 1.7% in volume terms in January 2023, according to the Office for National Statistics (ONS).

The latest monthly ONS construction industry bulletin has January having the lowest monthly value in level terms (£14,841m) since February 2022 (£14,719m).

While the decline is attributed partly to economic conditions – particularly in the housing sector – the heavy rain in the first two weeks of the month put the brakes on a lot of construction work, it is reported.

The decrease in monthly construction output came from a decrease in new work (down 4.0%), partially offset by an increase in repair & maintenance (up 2.0%) on the month.

The main contributors to the monthly decrease were infrastructure new work and private new housing, which decreased 6.5% and 3.0%, respectively.

Alongside the monthly decrease, construction output also saw a decrease of 0.7% in the three months to January 2023. This follows four periods of consecutive growth in the three-month-on-three-month series; the decrease came solely from a fall in new work (1.2% fall), as repair & maintenance was up 0.3%.

The official ONS numbers broadly tally with the monthly construction purchasing managers’ survey, which also reported a decliner activity in January, month-on-month, with house-building the weakest-performing category in terms of growth (or lack of). However the Purchasing Managers Index (PMI) returned to positive territory in February, indicating that the industry is now back in growth mode.

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Mark Robinson, chief executive of public sector procurement agency Scape, said of the latest ONS data:  “It’s unfortunate to see a dip in output after a resilient end to 2022 capped off a year of growth. But it indicates the uncertainty in the economy at the moment, and it’s difficult to know if growth will return soon.”

Fraser Johns, finance director at Beard Construction said: “The new year certainly didn’t offer the new start many in construction would have hoped for with a decrease in output in January and a fall in new work. This is driven by continued economic uncertainty and higher borrowing costs contributing to some clients holding back on their commitment to larger projects.

“There was however an uptick in repairs and maintenance works, thus despite clients feeling less inclined to pull the trigger on high-value blockbuster jobs, there will be those still pushing ahead with improving and maintaining current stock. To combat a volatile and uncertain landscape, businesses must remain flexible and raise their profile in the markets that will be strongest in the next 12 to 18 months.

“While this snapshot of January shows the challenging start to the year for many of the industry’s key sectors, businesses will be encouraged by a much stronger February. Some areas still continued to show weaknesses, especially the housing sector, but a lessening of supply chain pressures and recessionary fears helped to boost both new orders and overall confidence.

“However, this shows the somewhat ‘hot and cold’ nature of the sector, which is driven by uncertainty in such difficult times. Staying close to suppliers and stakeholders will remain a key priority, as will being able to adapt to changing market conditions and project demands.”

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