Construction output dips amid economic slowdown fears

Aaron Morby 2 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

Morgan Sindall to build former Willmott Dixon leisure job

New contractor appointed on
14 hours ago

Graham consortium wins £400m Manchester job

Equitix consortium to now work up DBFO plans for University of Manchester’s Fallowfield Campus
11 hours ago

Keltbray looking to sell infrastructure business

£378m turnover rail, energy and highways business up for sale
21 hours ago

Innovative viaduct building method used for first time in UK

HS2 contractors will build nine viaducts in Delta Junction using special cantilevered process
22 hours ago

Unite buys London site to fast-track 444-bed student scheme

£800m to be spent on London development pipeline in next five years
22 hours ago

CITB awards £2.5m of contracts to management consultant

Three outsourced deals in the last year for "project leadership and management consultancy"
22 hours ago

Village centre approved for 6,000-home new town plan

Hampshire's Welborne Garden Village plan has been in the pipeline for two decades.
21 hours ago

£3m fine after cherry picker demolition death

Court rules after tragedy during decommissioning of gas rig
22 hours ago

BAM plans wave of job cuts at UK Construction arm

Co-op Live arena plunges Bam Construction to £19.5m first-half loss
2 days ago

Robot tunnel builder goes into administration

Hypertunnel was hoping to revolutionise how underground structures are built
2 days ago

Wates to build £86m Guildford Council housing scheme

40% of the 248 homes will become council homes under partnership deal
2 days ago

“Scrap CITB” say three quarters of construction firms

Payroll giant Hudson Contract calls for CITB to be absorbed into new Skills England training body
2 days ago

£100m Prestwich Village revival approved

Vinci and Willmott Dixon in chase for Muse-led regeneration scheme
2 days ago

Carbon negative asphalt aggregate trialled on M11

Skanska and Tarmac test CO2 absorbing aggregate material on stretch of Essex motorway
2 days ago

Father and son sentenced over covid construction loan fraud

Bristol builders given suspended jail sentences over bogus Bounce Back Loans
2 days ago

Beck Interiors files administration notice

Supply chain has suffered delayed payments from £139m-turnover luxury fit out specialist
3 days ago

Green light for York Central civil service office hub

£60m office project accelerates York Central goods yard redevelopment
3 days ago

Blenheim House Construction enters administration

Administrators looking at options on present projects
3 days ago

Profits rise at Esh Group with more to come

Contractor confident about year ahead as market conditions move in right direction
3 days ago

Piling specialist Van Elle sees housing orders rise 30%

Mark Cutler says firm on course to deliver 10% annual sales growth
3 days ago

HS2 to spend £100m shutting sites where work never started

Remediation of sites no longer needed for cancelled Phase 2 will take three years
4 days ago

Willmott Dixon wins £61m deal for new Army dog unit

Contractor to revamp Kendrew Barracks in Rutland
3 days ago

Stockport advances 4,000-home Town Centre East plan

Council seeks consultants to steer plan for 280-acre area in the city
3 days ago

ISG sale imminent as buyers set-up UK holding company

South African nutrition entrepreneur and Australian partner primed to take over
4 days ago

CR Construction wins £210m Manchester towers

Construction to start next year on four blocks ranging from nine to 34-storeys
4 days ago

Southern Housing to rationalise supply chain following merger

Firms put on alert for £1.7bn construction framework renewal
4 days ago

Decision delayed on 52-storey Isle of Dogs tower

Hong Kong developer plans 460 flats block next to Millwall Inner Dock
4 days ago

Go-ahead for £850m North London estate rebuild

Flagship Edmonton housing estate redevelopment will deliver 2,000 new homes
4 days ago

Mace lands £184m Oxford Science Park contract

Contractor to build trio of laboratory and office buildings
5 days ago

Worker paralysed in 30ft fall during electricity pylon demolition

Specialist firm fined £240,000 after court hears linesman attached lanyard to a loosened steel section
4 days ago

Contractor services