News - Construction News

Construction output continues to lift

19 Jan 22

The ONS has reported its latest data on November’s construction output. The sector saw output increase by 3.5% in volume terms in November 2021, which is the largest monthly rise seen in construction output growth since March 2021.

The new data reveals that the strong demand for work was a result of easing supply chain bottlenecks and the unseasonal mild and dry weather.

November’s increase came solely from an increase in new work – seeing growth of some 5.7%, while repair and maintenance saw a slight decline of 0.2% on the month.

Construction’s recovery from the pandemic over 2021 has been mixed at sector level, with infrastructure registering 49.3% (£923M) above and private commercial registering 28.0% (£698M) below their respective February 2020 levels.

Responses to industry surveys have noted that the supply issues from earlier in the autumn had eased in November, however prices of construction materials continue to be high.

The 3.5% rise in construction output in November 2021 represents a rise of £496M in monetary terms compared with October 2021, as eight out of the nine sectors saw an increase.

Infrastructure new work and private housing new work were the largest contributors to the monthly rise in November 2021, increasing by 11.4% and 5.5% respectively. Infrastructure new work last saw similar monthly growth in May 2020. Anecdotal evidence suggests that an influx renewable energy projects – as a result of the government drive for net zero following COP26 – are responsible for the boost alongside numerous road and rail developments breaking ground.

Private housing repair and maintenance was the only sector to have fallen in November 2021, decreasing by 2.4%.

The latest ONS figures also give us insight into the three-monthly data, with construction output rising 1.6% in the three months to November 2021, the first three-monthly increase since July 2021.

Infrastructure new work and private housing new work made the largest contributions to the three-monthly rise, increasing by 3.6% and 1.8% respectively.

Fraser Johns, finance director at Beard commented on the data: “The growth in output in November is certainly encouraging that the construction sector is moving in the right direction. A major positive is that in the three months prior to November, output in the sector increased and a stable sustained period of growth is key for the industry.

“As ever, client confidence plays an important role, and demand for new work was the driving force as construction recorded a positive month.

While, Stuart Law, CEO of the Assetz group, was more cautious: “Surprisingly, construction output grew 3.5% in November, while new private housing saw an even greater increase at 5.5% month-on-month. Nonetheless, in a year which saw construction output hampered more broadly by supply chain issues, inflation, post-Brexit trade struggles, and labour and material shortages, housebuilders have had a difficult time in increasing output to meet the huge demand for new homes. Despite today’s figures, I expect these issues will continue to prove challenging for housebuilders in 2022, as they also look to adapt quickly to meet new environmental regulations, achieve the required 31% reduction in carbon emissions, and satisfy new requirements around EV charging points.”

Brian Berry, Chief Executive of the FMB, said: “Construction continues to recover after what has been a turbulent time for the industry. In particular the RMI market, which is the mainstay of small, local builders’ workload, continues to remain above pre-pandemic levels, which is good to see. The uplift in the market seems to suggest that it is now getting easier to obtain materials and a lucky spell of clear weather has allowed construction to continue without hinderance. However, we know from recent FMB data that building materials and skills pressures have slowed projects for 89% of FMB members. Even more concerning is rising inflation as the increased cost of construction materials will hit the pockets of the small builders who run to tight margins, and will increase prices for customers already facing rising bills.”