News - Construction News

Construction continues to build reports ONS

Latest data from the ONS shows that construction output has continued to build, with figures from December showing an increase of 2%.

These latest figures confirm that construction output has bounced back from the coronavirus pandemic restrictions and is now registering some £35M above February 2020 levels.

Alongside the monthly growth, ONS data shows that quarterly construction output also increased, showing 1.0% above Quarter 3. Meanwhile, the annual figures have also been released, these show a record 12.7% increase during 2021 compared with 2020 – however, this is mainly a result of the coronavirus pandemic contributing to a very weak 2020, which saw the record largest decline in annual growth (fall of 14.9%).

New orders are now at their highest level since Quarter 3 2017.

Infrastructure new work and private new housing were the largest contributors to the monthly increases growing 8.5% (£212 million) and 3.1% (£95 million) respectively.

The increase in infrastructure new orders was led by orders for both rail and harbour projects, with high value orders for HS2 also helping to drive up the increases up to £13,326M. Government investment in motorway improvements and green energy developments has also helped infrastructure deliver better figures.

The ONS reports new orders for rail projects saw its largest quarterly growth since Quarter 3 2019 and harbour projects saw its highest value since records began, driven by a one off project in the north east.

Anecdotal evidence from both returns received for the Monthly Business Survey for Construction and Allied Trades and the Business Insights and Conditions Survey (BICS) suggested some of the issues in sourcing construction products in the second half of 2021 had continued to ease.

The easing of sourcing certain construction products in December 2021 compared with previous months is also likely to have helped house builders output.

Fraser Johns, finance director at Beard commented: “The increase in construction output in December was driven by new work. With clients green lighting projects in greater numbers, this suggests confidence is growing, and the start of 2022 looks bright.

“When looking at 2021 as a whole, output increased by a record 12.7% compared to 2020. Output has now hit pre-pandemic levels, and although it has been a long and winding road, it appears we are firmly on the path to recovery.

“The construction sector has shown its resilience in 2021 and a key enabler of this is stakeholder relationships. At Beard we develop our relationships with suppliers and sub-contractors with regular meetings. And these meetings, coupled with our prompt payment policies have ensured we have been able to overcome any hurdles.

“Communication was also crucial in weathering the storms of 2021. Both interacting with employees, suppliers and sub-contractors was essential to keeping projects on track.”

Gareth Belsham, director of the national property consultancy and surveyors Naismiths, commented: “With the supply chain speed bumps finally starting to flatten, the construction industry hit the accelerator at the end of 2021, posting its fastest pace of monthly growth since March.

“While the final score for the year – output grew by a record 12.7% – is a record for an industry that has seen more than its fair share of boom and bust, the most encouraging number in today’s ONS data is the surge in new orders.

“Early signs from 2022 are that the supply chain problems which dogged the industry for much of last year are slowly starting to ease. There’s still a serious shortage of skilled workers and long delivery times are putting pressure on project managers, but the market is beginning to become more free-flowing.

“Construction has staged a Lazarus-like recovery from the body blow dealt it by the pandemic. With order books now looking very healthy, the challenge is to keep getting shovels in the ground and keep price pressures in check.”

If you would like to read more stories like this, then please click here