Construction output fell by 0.5% in December last year and by 1.3% in the final quarter of 2023, according to the latest data from the Office for National Statistics (ONS).
The monthly fall in output was due to a 1.1% decrease in new work – repair and maintenance increased 0.4% on the month. The quarterly decrease was also due to a fall in new work (-5%), with repair and maintenance work increasing by 4%.
Three out of the nine sectors experienced a fall in December 2023, with the main contributors to the monthly decrease seen in infrastructure new work (-6.4%) and private housing repair and maintenance (1.1%).
Annual construction output increased by 2.0% in 2023 compared with 2022 – the third consecutive year of annual growth.
Clive Docwra, managing director of property and construction consultancy McBains, said: “Today’s figures represent a serious blow for the construction industry, coming off the back of two previous months of falling output. It’s now crunch time for the sector with the UK economy entering recession in the final quarter of last year. In recent months a fall in new housebuilding has been a big factor in the decrease in growth, but today’s figures show new infrastructure work – which for a long while has propped up the sector – also drying up.
“While interest rates remain high and the economic picture continues to be unpredictable, we expect the overall outlook for 2024 to be one of uncertainty. The hope is that next month’s budget statement by the chancellor includes some measures to provide some impetus to the sector.”
Terry Woodley, managing director of development finance at Shawbrook, added: “Construction output ended 2023 on a subdued note, with high borrowing costs continuing their vice-like grip on the sector. However, there are encouraging predictions that a continued hold or drop in interest rates, partnered with retreating recession risks, could prompt more activity, especially in the house building sector. Developers should remain resilient while keeping an eye out for any changes that the spring statement could bring, particularly if the government decides to ease planning constraints.”
