The latest ONS figures for the month-on-month series show that construction output continues to fall, with a 0.2% decrease in volume terms
Construction output continued to fall, the ONS has found, as repair and maintenance stayed flat (0.0%) whilst new work dropped by 0.4%.
Aside from the interruption of business by the coronation in May, the numerous recent bank holidays were accounted for in calculations.
The third consecutive monthly fall in construction output saw volume terms decline by 0.2% in May 2023, with a monthly value sitting at £15,360 million.
Nearly half of the nine sectors saw a fall in May
The main contributors to the monthly decrease were observed in non-housing repair and maintenance and private housing new work, which decreased 2.5% and 1.7%, respectively.
Anecdotal reasoning was mixed, with some businesses reporting a continued ease in inflation, whilst others saw customer economic worries sustain in a slowing of private housing development.
The three-month-on-month growth was better- but not by much
In the three months to May 2023, construction output increased by 0.2% in the ninth such period of consecutive growth- though this was the weakest growth since the decrease in the three months to August 2022 (0.1% fall).
The increase was attributed almost entirely to rise in repair and maintenance (2.5%), as new work saw a decrease of 1.3%.
Despite the increase, total repair and maintenance has weakened compared with the strength at the start of the year.
The largest positive contributor was private housing repair and maintenance (3.9%); non-housing repair and maintenance (1.6%) was the other main contributor to the three-month-on-three-month increase, despite the decrease on the month.
Though output fell, industry voices were mildly optimistic
Commenting on the new construction figures for May, Clive Docwra, managing director of property and construction consultancy McBains, said:
“After the construction industry experienced a decrease in output in the two previous months, today’s statistics confirm that many work sectors are struggling to attract new orders.
“Private housebuilding in particular is still in the doldrums and the low activity is having a big impact on overall confidence within the construction sector.
“The fall in output in May should be kept in perspective as estimates show growth is increasing over the medium term, but given this is the weakest growth since August last year, the industry is still a fair way from recovery.”
Fraser Johns, finance director at Beard Construction said: “A reduction in construction output, prompted by a decrease in new order volumes certainly demonstrates how unpredictable the first half of the year has been. Nonetheless, the three-month picture saw a rise in output – if only marginally, thanks to demand for repair and maintenance.
“While some sectors are feeling the pressure, particularly private housing, and uncertainty in the wider economy may be inhibiting some clients from pulling the trigger on new work, this is certainly not the entire industry picture. At Beard, we haven’t seen a drop off in pipeline opportunities with strong signs of solid demand. In addition to commercial refurbishment projects, we have seen a broad portfolio of work with demand in care, education and with local authority as frameworks remain very active.
“It is certainly not normal trading conditions, but it is proving less volatile than the wider industry picture may represent. Slowly and surely, the hope is we return to more stable conditions but there are many factors at play in making this is a reality. For us and many firms across the industry, it’s all about remaining agile, minimising pressure on cost plans and responding to the opportunities still available.”
