Construction output fell 1.9% in volume in February – after rising 1.1% in January – according to the latest data from the Office for National Statistic (ONS).
The decrease in monthly output was caused by a 2.3% decrease in new work and a 1.4% fall in repair and maintenance work. Anecdotal evidence gathered by the ONS suggested heavy rainfall last month created delays in planned work and decreasing output.
Eight out of the nine sectors saw a fall in February 2024, with the main contributors to the monthly decrease seen in non-housing repair and maintenance and private commercial new work, which decreased 2.5% and 4.0%, respectively. The only increase was in the private housing repair and maintenance sectors, which grew 0.2%.
Construction output is estimated to have decreased 1% in the three months to February 2024. This was caused by a 3% decrease in new work – repair and maintenance work increased by 1.6%.
Clive Docwra, managing director of McBains, said: “After January’s return to growth following three months of falling output, today’s figures show it’s a case of one step forward, two steps back for the construction sector. We see that February’s heavy rainfall led to delays in planned work, particularly in private commercial new work but also in non-housing repair and maintenance, though a slight increase was seen in private housing repair and maintenance.
“Although inflation may be falling, the cost of borrowing remains prohibitive which is stifling wider investment. Private housebuilding is still fragile and over the next few months we expect other work sectors to experience fluctuations in output. Given this uncertain economic landscape, and with a general election on the horizon, we can expect the industry to experience similar ups and downs over the next few months.”
Terry Woodley, managing director of development finance at Shawbrook, added: “Despite a 1.1% increase in January, the challenges of the past few months have continued, as the latest ONS construction figures revealed a downturn in construction activity. Though there have been positive factors such as consistent borrowing rates and renewed confidence in the economy, housebuilding and commercial construction activity remained relatively muted. The upcoming summer months should increase workloads, especially as developers seek to diversify their portfolios. Already we’re seeing greater interest in specialist asset classes like retirement properties and student housing, and we expect to see this continue as the year progresses.
“That being said, unresolved issues around supply chains and the lack of planning reforms have remained points of contention for the industry. Those looking for guidance should reach out to specialist development finance lenders, as they can offer a more tailored funding solution to address specific concerns that developers may have.”
Giles Mackay, founder of Outra, said: “With a lack of housing supply exacerbating affordability pressures, it is disappointing to see that construction activity has been subdued over the last month. The figures are emblematic of Britain’s stuck-in-a-rut planning system, and the failure of successive policymakers to push on with meaningful action.
“The government needs to create a favourable policy environment for developers to encourage them to build housing in the areas where it is most severely needed, taking on a targeted, regionally based, housebuilding program to ensure that this is achieved.”
