Monthly construction output dropped below pre-pandemic levels for the third consecutive month in June by 1.3%, according to the latest ONS figures
Monthly construction output fell by 1.3% in June 2021, due to a decline of 4.2% in repair and maintenance. This was offset by a small 0.5% increase in new work.
Construction output in June was 0.3% (£39m) below the February 2020 pre-Covid pandemic level – new work was 2.1% (£188m) below this level, while repair and maintenance was 3.1% (£149m) above.
Despite the monthly fall, quarterly construction output grew by 3.3% in Q2 2021 compared with Q1 2021 – both new work (3.9%) and repair and maintenance (2.3%) saw increases.
New construction orders rose by 17.6% (£1,998m) in Q2 2021 compared with Q1 2021.
The annual rate of construction output price growth was 3.4% in June 2021, this was the sharpest annual rate of construction output price growth since August 2019 (3.5%).
‘Issues are really beginning to bite’
Commenting on the latest ONS stats, 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.”
Mark Robinson, group chief executive at SCAPE, commented: “Despite the sustained recovery of order books in the first half of the year, June’s fall in output is a sign that the long-term challenges facing the construction industry are starting to bite, with material and labour shortages inflating costs and extending project timelines.
“Inflation is tipped to continue rising until the end of the year at least, which has the potential to hamper the impact of increased government spending, as it looks to modernise infrastructure and stimulate a construction supercycle.
“The support provided to SMEs in the coming months will be key to mitigating any negative long-term effects – particularly for those businesses with restricted buying power or weaker order books post-Covid.
“Larger contractors can play a key role by ensuring SMEs are able to plan effectively whilst supporting their cashflow through fair payment practices.”
