Monthly construction output in Great Britain saw zero growth in both November and December.
December 2022 saw a 0.5% increase in new work on the previous month (offsetting November’s 0.4% fall in new work) but there was a 0.7% decrease in repair & maintenance, month-on-month (similarly offsetting November’s 0.6% rise in R&M).
At the sector level, December saw growth in non-housing repair & maintenance (up 5.4%) and infrastructure new work (up 3.7%). Private housing repair & maintenance was down 8.5% and private new housing was down 2.3%, according to ONS data.
For the fourth quarter of 2022 overall, construction output increased by 0.3% compared with the third quarter. This increase came from growth in both new work (0.4%) and repair & 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% (£242m) in the fourth quarter compared with Q3. This was mainly down to a 9.6% (£380m) fall in private commercial new orders and an 11.8% (£305m) fall in infrastructure.
The ONS reports that anecdotal evidence indicates that colder temperatures in early December 2022 extended the regular Christmas shut-downs by longer than expected for many businesses. The Met Office has confirmed that December 2022 was the UK’s coldest December since 2010. Businesses with less outdoor work were less affected by the adverse weather, the ONS bulletin says.
Mark Leeson, operations director of property and construction consultant McBains, commented: “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 house-building and also to encourage the greening of buildings to stimulate the industry’s recovery and help making inroads towards the net zero target.”
Fraser Johns, finance director at Beard Construction, said: “As predicted and many firms prepared for, construction output continued to flatten into December as ongoing impacts from high interest rates and diminished confidence impacted new housing.
“But once again, the data shows a tale of two halves. The slowdown in housing work in both private new housing and private housing repair and maintenance was offset by an increase in new work across key sectors. The best performing were infrastructure new work and non-housing repair and maintenance which certainly mirrors what we’re seeing and the projects we’re winning here at Beard.
“Any appetite for new commercial work will certainly make for encouraging news, especially as energy costs continue to stabilise and material costs for once stay within expectations. While the cost to borrow still remains higher than many have become accustomed to, we’re starting to see positive indicators that inflationary pressures are beginning to ease.
“Those firms that can demonstrate their skillset in delivering smaller, specialised projects in key sectors such as education, healthcare and both local and central government will be well placed in the coming 12 months. Constructions firms need to stay close to all stakeholders, continue to adapt, and remain lean and flexible in the months ahead.”
- If you are interested in how the Office for National Statistics does what it does, you can hear John Allcoat, head of construction output and development at the ONS, on episode 120 of the Re:Construction podcast (25th January 2023).
- You can find Re:Construction online here or subscribe for free on all usual podcast platforms.
Got a story? Email news@theconstructionindex.co.uk
