ONS October 2022 figures show that monthly construction output increased 0.8%, the fourth consecutive monthly growth and the highest level recorded since records began in January 2010
ONS October 2022 data estimates that the monthly construction output (£15,248m) was the highest level of output since records began twelve years ago, increasing 0.8% in volume terms.
This is the fourth consecutive monthly growth observed in the ONS figures.
Housing was a significant contributer to the monthly growth observed
At the sector level, five out of the nine sectors saw a rise in October 2022, with the main contributors to the monthly increase seen in private new housing, and non-housing repair and maintenance, which increased 2.9% and 1.7%, respectively.
The increase in monthly construction output in October 2022 came from increases in both new work (0.5%) and repair and maintenance (1.3%) on the month.
Supply chain issues and material costs continue to influence output
Anecdotal evidence continues the narrative around the increased prices for certain construction products, however annual price growth is starting to ease from the high level in mid-2022; despite the current high prices, the construction industry is maintaining growth, and new orders books remain strong.
The level of construction output in October 2022 was 4.8% (£698m) above the February 2020 pre-coronavirus (COVID-19) pandemic level; new work was 0.2% (£21m) above its February 2020 level, while repair and maintenance work was 13.5% (£677m) above the February 2020 level.
Alongside the monthly increase, construction output saw an increase of 1.1% in the three months to October 2022; this is the twelfth consecutive period of growth in the three-month-on-three-month series, and the increase came solely from growth in new work (3.1%) as repair and maintenance saw a decrease (2.1% fall).
Industry responses to the ONS October 2022 figures
Mike Hedges, Beard Construction director, says “The slight surprise for the sector here is that as of October, the ONS Construction Output data is still showing a rise in output.
“This comes on the same day that GDP rose by 0.5% in the last month, slightly outstripping the 0.4% expected, although the overall trend over the past three months was a decline of 0.3% compared to the previous quarter.
“Much of the rise in construction was led by new housing, with private commercial new work dropping back in volume and it is likely that when the statistics for November and December are released, they will also show further slight decreases in volume.
Inflation will exacerbate supply chain and material costs
“On the ground, the construction sector has been dealing for months with inflationary pressures and the rising cost of commodities like fuel, steel and other materials. The effect of continuing price inflation and a challenging new business environment won’t be properly understood until 2023 is fully underway.
“The headline inflation figure does not reflect the true rise in prices of materials like brickwork and aluminium – the price of which is being driven up by up to 50 per cent by increased fuel costs and global disruption to supply chains.
“As the fight for new work gets more challenging, the sector must avoid a race to the bottom on tenders as next year progresses. Continuing an open, realistic dialogue on costs between clients, contractors and suppliers will be important to help us navigate the economic challenges we will face.”
