Construction keeps momentum

The latest three-on-three month series of construction output data has been released by the ONS, showing the construction industry maintain its momentum through 2018.

The industry has survived a very turbulent year, with meteorological, political and economic conditions bringing ups and downs for the sector. However, the latest data indicates that construction left 2018 on a high, with data showing work was up 2.1% – driven by a large increase in new work.

All new work increased by 3.4%, but this was offset slightly by a decline in all repair and maintenance, which fell by 0.4%.

Once again, residential work proved to be the jewel in the crown, as new work increased by 4.9%. While infrastructure also held its place as one of the primary drivers of construction, seeing a 6.5% increase in new work.

Construction output recorded an all-time level high in November 2018 in the chained volume measure seasonally adjusted series; as the total value of construction output exceeding £14Bn for the first time since monthly records began in 2010.

The latest series shows construction output increased by £857M in the most recent three-month period compared with June to August 2018. This growth was driven by increases in all new work, with private housing once again holding the top spot – growing by £451M, and infrastructure, which grew by £332M. Other notable growths were seen in non-housing repair and maintenance, which increased by £230M, and new public housing, which increased by £107M.

When looking at the month-on-year series, the growth of 3.0% is due primarily to a 9.5% increase in private new housing work.

In the three-month on three-month series, the 2.1% growth is driven by the strength of September and November 2018, as October 2018 showed flat growth. This growth is driven largely by increases of 4.9% in private new housing, as well as a 6.5% increase in infrastructure spending, when compared with the three-month period from June to August 2018.

Blane Perrotton, managing director of the national property consultancy and surveyors Naismiths, commented: “On a day when the GDP data revealed how weak much of Britain’s economy has become, its housebuilders provided a rare bright spot.

“Residential building isn’t just the most active sector within construction, it has become a playmaker for the wider economy.

“Its dynamism powered the construction industry to solid growth in the latter part of 2018, with output in the three months to November expanding at a brisk 2.1% – a rate the wider economy can only dream of.

“But no-one in construction is crowing. Despite its current momentum, the industry’s ability to defy Brexit headwinds is far from guaranteed. New orders are slowing and builders are painfully exposed to economic gravity.

“Labour shortages and rising material costs are slicing through margins, and cut-throat competition for tenders is forcing contractors to bid low, and sometimes painfully low, for work.

“Two words best describe the current halting growth; hope and hypoxia. Progress is being made, but the industry is being starved of the oxygen of confidence.

“Barring an unlikely, miraculous resolution to Britain’s Brexit impasse, this tortuous progress is likely to continue.”

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