Monthly construction output increased 0.4% in volume terms in September, according to the latest data from the Office for National Statistics (ONS).
The ONS attributed the increase solely to the 2.1% rise in repair and maintenance work, which was partially offset by a 0.8% fall in new work on the month.
Three out of the nine sectors tracked experienced a rise in September, with the main contributor to the monthly increase seen in private housing repair and maintenance, which grew by 3.0%.
Quarterly construction output increased 0.1% in Q3 (July to Sept) 2023 compared with Q2 (Apr to June) 2023, after two months of falls.
Total construction new orders increased 3.9% (£393m) in Q3 2023 compared with Q2 and the annual rate of construction output price growth was 3.9% in the 12 months to September 2023 – this has slowed from the record annual price growth in May 2022 (10.4%).
Clive Docwra, managing director of property and construction consultancy McBains, said: “Today’s figures will provide a measure of relief for the construction industry, coming off the back of two successive months of falling output. Whilst we have seen a small uptick in development lending, where schemes that were previously unviable have been re-purposed to align with current market conditions, this is not reflective of overall market sentiment, as evidenced by today’s figures showing a 0.8% decrease in new work on the previous month.
“Our clients tell us that borrowing costs are still deterring some investments, and while interest rates may have peaked, the longer-term outlook remains uncertain. On the plus side, the industry will welcome total construction orders increasing over the third quarter of 2023 compared with the previous quarter, as a result of new work in the public and infrastructure sectors, but volume housebuilding will take more time to see a turnaround while interest rates remain high.”
Terry Woodley, MD of development finance at Shawbrook, added: “Construction output has remained robust in the face of rising costs and a turbulent economic landscape. However, developers have had to adapt. Recent research from Shawbrook shows that rising costs are still the biggest challenge for developers at present, with two-in-five listing this as their biggest concern.
“With 96% having already made changes to their strategies in the past 12 months, developers are regularly assessing demand in different business areas to maximise returns and future proof their businesses against further economic headwinds.
“This shift is evident in our research, which shows that developers are moving away from private housing developments and prioritising more diverse projects, including developments such as hospitality, new build city flats, student accommodation and high street retail units amongst other property types.”
