Construction output rises in January after three months of falls , ONS finds

Construction output rises in January after three months of falls , ONS finds

New construction figures published by the Office for National Statistics (ONS) today show that output increased by 1.1% in January 2024 compared to the previous month.

The increase, which came as a result of increases in both new work (1.1%) and repair and maintenance (1.2%), follows three consecutive monthly falls, with the monthly value in levels terms at £15,422 million in January 2024.

However, quarterly construction output is estimated to have decreased 0.9% in the three months to January 2024. This came solely from a decrease in new work (4.5% fall), as repair and maintenance increased by 4.0%.

The decrease over the three months came from infrastructure new work and private housing new work, which fell 9.3% and 5.2%, respectively, with the main positive contributions coming from non-housing repair and maintenance, and private housing repair and maintenance, which increased 3.2% and 3.3%, respectively.

At the sector level, six out of the nine sectors saw a rise in January 2024. The main contributors to the monthly increase were private new housing, and non-housing repair and maintenance, which increased 2.6% and 1.9%, respectively.

Clive Docwra, managing director of property and construction consultancy McBains, said: “After three consecutive months of falling output, the industry will welcome January’s return to growth.

“The 2.6% increase in private housing is particularly encouraging given the performance of this sector over the last few months. The hope is that if mortgage rates ease, it could lead to increased residential demand which in turn could trigger a bigger turnaround in housebuilding numbers.

“But whether the increase in January turns out to represent the green shoots of wider recovery or a blip remains to be seen. Growth over the longer term is estimated to have decreased 0.9% in the three months to January 2024, highlighting that conditions remain unsettled for many industry sectors.”

Scott Motley, head of programme, project and cost management at AECOM, said all eyes will be on this week’s housebuilder earnings season, which will be a bellwether for firms across construction, who are operating in a far more competitive market with much tighter finances.

He added: “January’s increase in output raises hopes that the construction sector is turning a corner despite the ongoing challenges in the housebuilding market, which has a significant impact on overall performance.

“Inflationary issues have receded since the start of the year, and most long-term cost issues within contracts have either been renegotiated or worked through. That said, the cost of borrowing remains heightened at a time when we’re seeing tender activity becoming more competitive in some subsectors.

“Most contractors remain reasonably confident in their financial health but, the fact that this is being billed as a year for modest growth suggests some firms will struggle as we head into the Spring. Indeed, many will be watching carefully as housebuilder earnings season – a bellwether for others – gets underway this week.”

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