Construction holds off recession, only just

Construction holds off recession, only just

Output in the UK construction sector is estimated to have been flat in volume terms during December 2022, the Office for National Statistics (ONS) has found.

An increase in new work (0.5%) was offset by a decrease in repair and maintenance (0.7% fall), resulting in 0.0% growth for the month.

At the sector level, the main positive contributors were seen in non-housing repair and maintenance, and infrastructure new work, which increased 5.4% and 3.7%, respectively; the main negative contributors were seen in private housing repair and maintenance, and private new housing, falling 8.5% and 2.3%, respectively.

Quarterly construction output increased 0.3% in Quarter 4 (Oct to Dec) 2022 compared with Quarter 3 (July to Sept) 2022; the increase came from growth in both new work (0.4%) and repair and maintenance (0.1%).

Annual construction output increased by 5.6% in 2022 compared with 2021, which follows a record increase in 2021 of 12.8%.

Total construction new orders decreased 1.8% (£242 million) in Quarter 4 2022 compared with Quarter 3 2022; this quarterly fall came mainly from private commercial new orders and infrastructure, which fell 9.6% (£380m) and 11.8% (£305m), respectively.

The annual rate of construction output price growth was 9.7% in the 12 months to December 2022; this has slowed slightly from the record annual price growth in May 2022 (10.5%).

Mark Robinson, group chief executive at SCAPE, said: “Flat growth in December is a more positive note to end what was a challenging second half to 2022. Despite this, uncertainty remains the dominant feeling among contractors attempting to plan for the year ahead, with few forecasts agreeing on the scale of the recession.

“While many look to the public sector to shape the pipeline of new work for further confidence, recent reports that Department for Levelling Up, Housing and Communities’ capital spending powers have been paused will concern firms that are keen to support local authorities’ regeneration plans. Developers and contractors should work collaboratively to assess timelines for delivery and identify alternative funding routes if necessary to ensure 2023 isn’t a year of declining output.”

Mark Leeson, operations director of property and construction consultancy McBains, said: “After the flat growth witnessed in November, today’s figures prove that the construction industry is still swimming against the tide in many work areas.

“The cold weather in December undoubtedly had an impact, but while the continued increase in infrastructure work is welcome, more worrying is the fall in private new housing work, reflecting the wider economic uncertainty. This trend is likely to get worse, with major volume housebuilders all warning this week they would be building fewer homes as customers put off major purchase decisions amid the cost-of-living crisis.

“Meanwhile, despite more recent upbeat forecasts of the extent of the UK recession, construction would benefit from an injection of confidence. We are hoping that the Chancellor, in his Budget next month, provides incentives to boost housebuilding and also to encourage the greening of buildings to stimulate the industry’s recovery and help making inroads towards the net zero target.”

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