Construction output clicks back into growth but orders soften

Aaron Morby 1 year ago

Monthly construction output grew 1.3% in volume terms in September, ending the bumpy decline that started after June.

The welcome return to growth of both new work and repair and maintenance still left industry new work 3.5% below the pre-pandemic February 2020 benchmark for output.

The latest batch of new orders and materials price data also point to challenges ahead.

Returns from contractor show total construction new orders fell 9.2% (£1.2bn) in the third quarter, compared to the previous summer second quarter. This was mainly caused by sharp fall in infrastructure and commercial orders, down 25% and 22% respectively

At the same time, the annual rate of construction output price growth hit 5.1% in September, the strongest price growth since records began in 2014.

Price inflation was strongest in new housing (7.5%) and private industrial new work (6.3%).

Mark Robinson, group chief executive at procurement group Scape, said: “Confirmation of September’s growth will provide a strong foundation for the sector heading into what is likely to still be a challenging end to the year – characterised by further inflation, and disruption to labour and supplies.

“While these factors will undoubtedly inhibit the chances of an all-out building boom going into 2022, the outcomes of COP26 will go a long way to sustaining growth this winter as the carbon footprint of the built environment comes into sharper focus.

“The UK has set its stall out as a global leader on net zero, but an extensive programme of retrofitting and regeneration, supported by ‘carbon-first’ procurement, is needed if we are to reduce current and future emissions to the levels needed.”

Across the sectors, non-housing repair and maintenance was the largest contributor to the monthly increase, growing 2.6% (£67 million). Public other new work and infrastructure new work also saw large increases in September 2021, of 7.2% (£50 million) and 1.5% (£40 million) respectively.

Public new housing and public housing repair and maintenance offset some of the monthly growth, seeing a monthly fall in September of 6.5% and 2.7%, respectively.

Anecdotal evidence gathered over the month suggests the slowdown in public new housing was coming from the sharp increase in prices.

Monthly growth in September in contracts to trend quarterly return

After the series of previous monthly falls construction output was down 1.5% in the third quarter.

New work fell 0.3% in Q3 with large falls seen for private new housing and public other new work, down 3.5% and 12.8% respectively.

In contrast, infrastructure saw strong growth up 10% in the three months to September driven by High Speed 2, motorway improvements, and green energy developments.


Latest news

Materials giant CRH looks to sell contractor Farrans

More than 550 staff set to get new owner
2 days ago

West Yorkshire transport projects delayed to save £270m

Over 30 transport schemes to be placed on hold due to cost inflation budget pressure
19 hours ago

Decision on A1 Costain dualling job delayed for third time

Development consent decision for £260m Northumberland scheme put back a further 9 months
20 hours ago

Colas wins £140m Cheshire highways upkeep deal

Incumbent contractor Ringway will handover to Colas in April
20 hours ago

Skanska to lend staff cash

Contractor links-up with finance firm to offer affordable loans to employees
20 hours ago

Ilke Homes pulls off £100m record-breaking fund raise

Largest-ever capital raise by a UK modular house builder to fund expansion
2 days ago

Construction buyers fear for year ahead

"Construction companies now have a tightrope to walk in terms of being ready for recovery and cautious around investment"
2 days ago

Gove calls for competition probe into house building

Levelling Up and Regeneration Bill 'strengthened' with new measures
2 days ago

Schools get £500m for energy upgrades this winter

Extra cash found for better heating controls, insulation and energy efficient lighting
2 days ago

1,000-home North London scheme approved

Developer Hill will start work in the Spring on South Tottenham site
2 days ago

Bid race for £500m Suffolk construction framework

Construction and building services firms called up for East of England four year deal
2 days ago

Mace employs robot dog to avoid slip and trips in tunnel

Robot working in dark and hazardous conditions under Heathrow Airport
2 days ago

Administrator details confirmed at Southampton M&E firm

Begbies Traynor now in charge at Working Environments as suppliers face large losses
2 days ago

Former Galliard chief takes helm at Inland Homes

New CEO Don O'Sullivan sets out to return south east house builder to profitability
2 days ago

Applicant numbers nosedive for construction vacancies

Recruitment market gets even more competitive - how the Enquirer can help
3 days ago

Industry veteran to head Henry Bros northern arm

Peter Commins, former Kier and Balfour Beatty northern chief, to spearhead growth drive
2 days ago

Housing association shuts in-house modular factories

Swan closes loss-making steel frame and cross-laminate timber factories
3 days ago

350-homes approved around iconic London Tube station

Housing blocks to be built around Grade II-listed Hounslow West Tube station
3 days ago

Domis set for £195m Boddingtons Brewery scheme

Developer Salboy buys Manchester site to kickstart long-awaited 556 homes project
3 days ago

John Lewis £500m funding deal to build 1,000 rental homes

Deal to advance BTR flats at store sites in Bromley, West Ealing and Reading
3 days ago

Esh launches new housing retrofit division

Esh Retrofit Solutions will target market to improve the energy performance of social rented homes
3 days ago

Eric Wright wins tricky £52m Liverpool transformation

Contractor working with engineers at Ridge and Partners on "challenging" Stanley Lock Flight site
6 days ago

Investment giant buys Bristol M&E contractor

RDCP Infrastructure acquires Avon Combined Electrical Services
6 days ago

Demolition start for £50m Farnworth town centre rebuild

Caddick Construction is tipped for main works due to start in the spring
6 days ago

L&G Modular strikes deal to build 1,000 affordable homes

Modular homes business teams up with Hampshire's Vivid housing association
6 days ago

Former Erith operations director joins John F Hunt

Scott Exell named new operations director at demolition specialist John F Hunt
6 days ago

Green light for £135m Leeds twin tower resi scheme

Construction to start in New Year on 500 build-to-rent apartments
6 days ago

Mace hits 1m tonnes carbon saving target for clients

Present work pipeline betters 2026 carbon emission saving target
6 days ago

Plans in for £40m surf park at former Kent colliery

Seahive surf lagoon and health resort will be built near Deal
7 days ago

Crushed demolition worker vows to return to industry

Shannon Brasier hoping to return to construction following horror accident
7 days ago

Contractor services