Monthly construction output is estimated to have decreased 1.7% in volume terms in January 2023; the weakest monthly growth since June 2022 and the lowest monthly value in level terms since February 2022, according to the Office for National Statistics (ONS) data.
The ONS said anecdotal evidence suggested economic uncertainty had led to delays, cancellations and less work being requested by customers, which had “particularly contributed to an ongoing slowdown of work in the housing sector”. New work decreased by 4.0% in January, which was partially offset by a 2.0% increase in repair and maintenance work.
Alongside the monthly decrease, construction output saw a decrease of 0.7% in the three months to January 2023; this follows four periods of consecutive growth in the three-month-on-three-month series.
Reacting to the news, Dave Sheridan, executive chairman at ilke Homes, said: “Today’s data indicates the economic headwinds construction is facing, with the cost-of-living continuing to hit consumers’ pockets and higher-than-usual mortgage rates deterring new home buyers.
“As the budget approaches, the government must now focus on ensuring that the sector can get on with building the infrastructure the country so dearly needs, which includes housing. Ministers are right to consider the Migration Advisory Committee’s recommendation that construction workers should be added to the ‘shortage occupation list’, because the industry is going to need 216,000 new workers by 2025.”
Clive Docwra, managing director of property and construction consultancy McBains, added: “Today’s figures are proof that the cloud of economic uncertainty is still impacting construction output levels – and across the majority of work areas. Falling client demand is now severely affecting private housebuilding, while a fall in new orders across all work sectors will set alarm bells ringing. Infrastructure also saw a decrease of 6.5% in terms of new work – a particular worry as this sector has propped up the industry’s performance over the last few months.
“The industry is also hamstrung by skills shortages, and reports suggest the government may make changes after next week’s budget to the points-based immigration system to allow construction to recruit more foreign workers. This would be welcomed, as fewer EU nationals and the withdrawal of older workers from the labour market have shrunk the industry workforce, with the number of vacancies at the end of 2022 standing at 46,000 – almost double pre-pandemic levels. However, we also need client demand to be there – and today’s figures show that to be a concern.”
