Construction output dips amid economic slowdown fears

Aaron Morby 3 years ago
Share

Construction output slipped by 0.4% in April, marking the first decline since October, as fears about the wider economy cooled business confidence.

The decrease came from a fall in repair and maintenance of 2.4%, which was slightly offset by a 0.9% rise in new work.

Monthly construction output index


The main sectors dragging down overall growth were private housing repair and maintenance, and private commercial new work, which dropped by 6.5% and 3.8%, respectively.

This hints at falling confidence about spending among home owners at large and commercial property developers.

Though ONS economists blamed the drop in RMI work on a previous March high in the aftermath of storms Dudley, Eunice and Franklin in February.

April output change in £m by work sector


At the same time spending on infrastructure, private industrial and private housing new work continued to grow, holding up new work activity.

Mark Robinson, group chief executive at procurement body SCAPE, said: “A monthly decline will do little to alleviate concern regarding the impact of inflation on industry output.

“It’s clear that contractors are facing a turbulent period as input costs continue to rise. With inflation set to increase as much as 10% by the end of the year, firms should be using the peak summer months to scenario plan for further price rises.

“While the prospect of an upcoming economic recession is a reality, the industry has performed strongly for more than two years now and should be looking to maintain momentum by working with clients to build flexibility into their project specifications.”

Gareth Belsham, director of the national property consultancy and surveyors Naismiths, said: “Economic gravity and weakening business confidence have finally caught up with the construction industry.

“As the momentum of 2021 drains away, the slowdown has turned into a slide – with the sector posting its first monthly fall in output for seven months.

“But so far this is a cooling rather than a collapse. Private sector house building continued to expand in April, climbing 1.1% compared to March and 6.5% compared to April 2021.

“There was a big jump in industrial sector construction too, up 7.6% on the month and a dizzying 48.7% on last April.”

On a quarterly basis, the picture was still positive. In the three months to the end of April, output grew by a respectable 2.9%, down from the 3.8% posted in the first quarter of the year.

Belsham added: “But no-one should be complacent. The pipeline of new work is starting to slow, with new orders falling by 2.6% in the first three months of the year compared to the final quarter of 2021.

“Once strong investment cases are being tested by soaring construction costs and nagging questions about what demand for the completed project will be like, and as a result increasing numbers of developers are pausing for thought before committing.

“While many construction firms still have reassuringly full order books for the coming months, the future beyond that is looking rapidly less rosy.”

 

Latest news

Buyers more bullish about prospects for year ahead

Residential "resilient" but commercial work a weak spot
17 hours ago

Council backs first Brutalist car park-to-flats scheme

Newcastle-under-Lyme multi-storey car park to be reborn as pioneering homes scheme
19 hours ago

Hinkley Point C hits peak build with 26,000 jobs

3,000 more workers to join as fit-out work ramps up
19 hours ago

Over 40 firms win Wessex Water M&E minor works deal

Broad sweep of specialists picked for AMP8 programme
19 hours ago

Spencer lands Scottish bridge hat-trick

Steelwork, gantries and bearing upgrades on Kessock, Forth and Tay crossings
1 day ago

Winners revealed for £1.5bn decarbonisation deal

Fusion21 confirms places for 40 firms: Full list
19 hours ago

Cladding firm fined £225,000 after fatal fall

Court hears how cherry picker didn't reach all parts of repair job
20 hours ago

Early call-out for Ebbsfleet Garden City infrastructure

Bidders day to set out plan for Ebbsfleet Central commercial scheme
19 hours ago

Completed buildings caught-up in Gateway 2 chaos

Developer distraught after dealing with Building Safety Regulator
2 days ago

Aviva submits plans for 34-storey City office tower

Subject to planning work to start in autumn 2027
2 days ago

Murphy takes 40% stake in Aussie civils contractor

Firm enters Australasian market with stake in Sydney-based contractor Abergeldie
2 days ago

Moat seeks firm for £420m repairs and maintenance deal

15-year deal to upkeep 20,000 south east homes
2 days ago

Lynch takes over hotel for Sizewell plant operators

Hire giant now in the hotel business to guarantee accommodation for workers
2 days ago

Subcontractors wanted across Scotland

Latest Constructionline event in Glasgow: Register now
2 days ago

Six guilty of £2m bribery over Devon housing site deals

Corrupt building bosses and E.ON project chief and QS sentenced
6 days ago

1,650 former ISG staff launch legal claims

Redundancy Payment Service facing payout of more than £9m
7 days ago

Plans lodged for £1bn cancer research centre in Sutton

London Cancer Hub will deliver around 1m sq ft of lab and research space
6 days ago

London Met Uni seeks firm for £284m estate revamp

Contractor wanted to deliver capital works and FM
6 days ago

Delayed £2bn estate rebuild back on as Berkeley signs deal

Birmingham council development agreement paves way for 2028 Ladywood start
7 days ago

Tilbury Douglas boosts margin to 2.1% as profits double

Firm targets 3.5% margin by 2029 under new business plan
7 days ago

Subbies battle for fastest bricklayer title

Winchmore management team go back on the tools
7 days ago

Green light for revised McLaren Reading revamp

Mixed-use plans to transform Broad Street Mall site
6 days ago

Three arrested in Blu-3 and Mace bribery probe

Serious fraud office swoops over alleged £3m bribes to former Mace associates
1 week ago

Scotland’s most complex A9 dualling job heads to market

Market testing starts for £205m Pitlochry to Killiecrankie 6.4km upgrade
1 week ago

Unite signs £390m student beds JV with Manchester Met

Construction at Cambridge Halls site to start next year
7 days ago

Turkish contractor Limak to build new Luton Town stadium

Construction to start this summer on 25,000-seater venue
1 week ago

Kitchen fitter crushed to death by concrete blocks

House builder goes into liquidation before court case
7 days ago

Mears clinches £230m renewal for key Milton Keynes housing deal

Housing upkeep contractor achieves 100% renewal rate in bust rebid period
7 days ago

Murphy on board at new £32m rail station

Construction to start next year at Golborne station
1 week ago

HS2 engineers finish UK’s heaviest bridge slide early

A46 Kenilworth Bypass reopens 30 hours earlier than planned
1 week ago

Contractor services