Construction output shows modest increase

Construction output shows modest increase

Monthly construction output is estimated to have increased 0.2% in volume terms in March 2023, new figures from the Office fro National Statistics (ONS) have revealed.

The ONS said the rise came from an increase in new work (0.7%), partially offset by a decrease in repair and maintenance (0.6% fall) on the month.

At the sector level, four out of the nine sectors saw a rise in March 2023, with the main contributors to the monthly increase seen in infrastructure new work and public other new work, which increased 2.2% (£51 million) and 6.5% (£48m), respectively.

Quarterly construction output increased 0.7% in Quarter 1 (Jan to Mar) 2023 compared with Quarter 4 (Oct to Dec) 2022; the increase came solely from a rise in repair and maintenance (4.9%), as new work saw a decrease of 1.9%.

Total construction new orders decreased 12.4% (£1,571m) in Quarter 1 2023 compared with Quarter 4 2022; this quarterly fall came mainly from private commercial and private housing new orders, which fell 22.3% (£773m) and 18.4% (£607m), respectively.

The annual rate of construction output price growth was 8.5% in the 12 months to March 2023; this has slowed slightly from the record annual price growth found in May and June 2022 (10.4%).

Clive Docwra, managing director of property and construction consultancy McBains, said: “The modest increase in output will provide a measure of good news for the construction industry, especially given a large proportion of work during the month would have been impacted by it being the wettest March for more than 40 years.

“But the private housing and commercial sectors are still weak, with the 0.2% increase in output being largely down to other work sectors. The picture in the housebuilding market in particular is not surprising, because although reports elsewhere show house prices are rising which would normally trigger an increase in construction activity, most developers are still planning to reduce by about a quarter the number of homes they planned, and further land purchase is also on hold until the economic forecast becomes clearer.

“More generally, cost pressures and materials shortages seem to be stabilising, but it’s too early to say whether this represents a longer-term recovery, especially given the ups and downs of the last three years. This is reflected by the first quarter figures of 2023 showing total orders decreased by more than 12 per cent compared with the final quarter of 2022.”

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