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London Build

19 Jul 2022

May Construction Output Increased by 1.5%, ONS Figures Reveal

May Construction Output Increased by 1.5%, ONS Figures Reveal
May construction output increased by 1.5% according to the latest'ONS figures, which is a record high in monthly-level terms ('15,053 million) since records began in January 2010.

The increase in May construction output came from an increase in new work, despite a slight decline in repair and maintenance.

The main contributors to the monthly increase seen in'May 2022 were private commercial new work and private new housing, which increased by 12.1% and 7.2% respectively.

The level of construction'output in May 2022 was 4.1% above the February 2020 pre-pandemic level, whereas new work was slightly below the February 2020 level.

Continual issues sourcing certain construction products

Anecdotal evidence highlights the continual issues in sourcing certain construction products, particularly for smaller sized firms.

Construction materials'such as concrete, bricks and timber still remain at a high cost, alongside significant mentions of'higher fuel costs and VAT tax increases for red diesel have had an impact this month.

Private industrial new work has seen growth in May 2022 and continues to be strong when compared with measures in the previous year, which has come from a rise in warehouses and distribution centres, as consumer habits change post-pandemic.

Private housing new work and private commercial new work were the largest contributions to the monthly increase

Private housing new work and private commercial new work increased by 7.2% and 12.1% respectively.

The increase seen in private commercial new work comes after a large monthly decrease of 7.0% in April 2022.

Continued anecdotal evidence suggests that the increase in private commercial comes from a rise in offices. This is further shown in the new orders data, which is most likely linked to office space refurbishments increasing, as employees return to offices.

Construction output rose by 3.0% in the three months to May 2022

This is the seventh consecutive increase in the three-month on three-month series. Increases in both new work, and repair and maintenance contributed to the growth, with seven out of the nine sectors seeing an increase.

All repair and maintenance sectors have shown positive growth in the three months to May 2022, with evidence suggesting that the increase in the repair and maintenance sectors was because businesses had a higher workload in March 2022, due to repair work from the storms seen in late February 2022.

Industry comment

Beard Construction finance director Fraser Johns commented:''On the face of it, these are encouraging figures. Any sector growth is good news, particularly ' as in this case ' when it's driven by an increase in new work.

'However, we must be mindful that the release of pent-up demand after the last two years is likely to be a contributor to the current growth. Coupled with continued inflationary pressures across all areas of the economy, there is no guarantee that this growth trend will continue.

'Working in collaboration with our customers and our supply chain across all stages of a project, from tendering to after-care, continues to be of utmost importance in working through the many challenges being faced.'

'Latest ONS stats mask a worrying trend'

Brian Berry, chief executive of the Federation of Master Builders (FMB) stated: 'The positive numbers in the latest ONS stats mask a worrying underlying trend. Activity in the repair, maintenance and improvement sector (RMI) continues to fall, likely influenced by consumers juggling rising cost of living pressures.

'RMI work is the backbone of the construction industry and the lifeblood of small, local builders. If the decline continues, insolvencies will follow. The ONS is right to point to the pressures of high costs of construction products, lack of materials, high fuel costs and the ban on red diesel as having an impact on the sector. All these costs add up and must be passed on to a reluctant customer base who are looking to make savings.' '''

Source: PBC Today'