Construction output falls for third consecutive month

Construction output falls for third consecutive month

Output in the UK construction sector recorded a third consecutive monthly decrease in May 2023, according to the Office for National Statistics (ONS).

Monthly output is estimated to have decreased 0.2% in volume terms in May, with the monthly value in level terms at £15,360 million.

The decrease in monthly output came solely from a decrease in new work (0.4% fall), with repair and maintenance being flat (0.0%) on the month.

At the sector level, four out of the nine sectors saw a fall in May 2023, with the main contributors to the monthly decrease seen in non-housing repair and maintenance and private housing new work, which decreased 2.5% and 1.7%, respectively.

Anecdotal evidence continued to indicate a slowdown in private housing, referencing customers’ economic worries; however, some businesses across other sectors continued to report an easing in inflation.

An additional bank holiday was held for the coronation of King Charles III on 8th May 2023; while adjustments are made for regular calendar effects, there was no explicit adjustment for this ad hoc event; the timing of the bank holiday indirectly affects the number of trading days, which could affect construction monthly estimates.

Alongside the monthly decrease, construction output saw an increase of 0.2% in the three months to May 2023; this is the ninth period of consecutive growth in the three-month-on-three-month series; however, this is the weakest growth since the decrease in the three months to August 2022 (0.1% fall).

The increase in the three-month-on-three-month series came solely from a rise in repair and maintenance (2.5%), as new work saw a decrease of 1.3%; despite the increase, total repair and maintenance has weakened compared with the strength at the start of the year; the largest positive contributor was private housing repair and maintenance (3.9%); non-housing repair and maintenance (1.6%) was the other main contributor to the three-month-on-three-month increase, despite the decrease on the month.

Clive Docwra, managing director of property and construction consultancy McBains, said: “After the construction industry experienced a decrease in output in the two previous months, today’s statistics confirm that many work sectors are struggling to attract new orders.

“Private housebuilding in particular is still in the doldrums and the low activity is having a big impact on overall confidence within the construction sector.

“The fall in output in May should be kept in perspective as estimates show growth is increasing over the medium term, but given this is the weakest growth since August last year, the industry is still a fair way from recovery.”

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