New ONS figures show construction continues to play catch up

Construction output continued its recent decline in the three-month on three-month series, falling by 1.7% in May 2018; representing the third consecutive decline in this series.

The three-month on three-month decrease in construction output was driven predominantly by a fall in new work, which also fell for the third consecutive month, decreasing by 2.5% in May 2018.

Following a broadly negative start to 2018 in the month-on-month series, construction output showed signs of recovery in May 2018, increasing by 2.9% compared with April 2018.

The month-on-month growth in construction output was in part driven by the recovery of private housing repair and maintenance work, which grew 7.3% in May 2018 following a weak start to the year.

Rebecca Larkin, Senior Economist at the Construction Products Association, commented: “The construction industry appears to have caught up with some of the work lost in February and March due to the freezing ground conditions and snow disruption.

"Month-on-month gains were evident across all sectors, but were strongest in private housing repairs, maintenance and improvement (RM&I), the third largest construction sector, due to warmer weather and longer days.

“Private housing new build was 8.4% higher than a year earlier, which points to strength in activity beyond basic catch-up as the industry enters the busier Spring and Summer selling season. However, for the year to date overall construction output remains 0.3% lower than a year earlier, with particular weakness in public non-housing (mainly education and health) and commercial, where a significant fall in new orders signals smaller pipelines of work.”

Mark Robinson, Chief Executive of Scape Group, said that although the data points to disappointing level of output over the past three months, it is clear that in May things started to turn around.

"It is particularly promising to see that total new work increased by £13.7 billion over the past month alone, including significant contributions from infrastructure, as well as strong housebuilding," he continued.

“However, we still have a long way to go to reach output levels needed to keep the UK as a world-leader in the development of new infrastructure. Our latest research report finds that over the last two decades, infrastructure output across the UK has increased by just £70 per person. Despite record investment, the supply chain has not seen much increase in construction activity on the ground. More must be done to ensure SMEs benefit from the delivery of new infrastructure projects, particularly as we head towards Brexit.

“Even greater investment in infrastructure is also essential if the UK is to remain competitive. Our rapidly growing population deserves greater investment in the services they use every day to ensure that they run both efficiently and effectively. The government should not become distracted by Brexit and must continue with the business of building; committing to invest in our road and rail links will improve connectivity between cities and help them to flourish. Clarity and consistency on Brexit is essential to keep the construction industry and the wider economy moving in the right direction.”