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

Breakthrough for HS2 as first Birmingham tunnel section dug

Balfour Beatty VINCI completes 3.5km TBM drive in 652 days drive
2 days ago

HS2 Curzon Street station redesign approved as timber roof axed

Change to meet stricter fire safety rules and cut maintenance costs
2 days ago

Care home fire trial collapses

Prosecution withdrawn against four firms including Morgan Sindall Property Services
3 days ago

Leicester rebids £22m station revamp after failed tender race

Council opts for ECI route after receiving one bid for project
2 days ago

Kier wins East Coast College rebuild job in Great Yarmouth

Work to start this summer for 1,300-student college
2 days ago

R G Carter wins £28m hospital car park job in King’s Lynn

MSCP paves way for £1.5bn Queen Elizabeth Hospital rebuild in 2027
2 days ago

London to relax green belt building rules

Sadiq Khan shifts position on planning
2 days ago

Willmott Dixon wins Great Yarmouth waterfront deal

North Quay 10.5 acres mixed-use scheme to advance
3 days ago

SIG chief quits to join Travis Perkins

Gavin Slark to leave by the end of this year
2 days ago

Eight take key spots on £250m Prosper framework

Housing and public building upkeep deal for North East awarded
3 days ago

Early call-out for £150m Ebbsfleet Garden City infrastructure

Bidders day to set out plan for Ebbsfleet Central commercial scheme
4 days ago

McLaren storms April contracts league with flurry of wins

Cardiff Bay Arena job headlines a series of big contract wins
3 days ago

Balfour Beatty lifts cash forecast after strong first quarter

Contractor set to hit £1bn average monthly net cash in 2025
3 days ago

Goldman Sachs-owned Adler & Allan buys 180-strong civils outfit

West Country's Glanville Environmental gets new owner
3 days ago

Caddick lands first contract for £200m Skelmersdale revamp

Developer gets green light for masterplan
3 days ago

Van Elle sells HGV fleet to haulage firm

WS Specialist Logistics pays £2.9m to take on fleet and drivers
3 days ago

Buyers more bullish about prospects for year ahead

Residential "resilient" but commercial work a weak spot
4 days ago

Council backs first Brutalist car park-to-flats scheme

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

Hinkley Point C hits peak build with 26,000 jobs

3,000 more workers to join as fit-out work ramps up
4 days ago

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

Broad sweep of specialists picked for AMP8 programme
4 days ago

Spencer lands Scottish bridge hat-trick

Steelwork, gantries and bearing upgrades on Kessock, Forth and Tay crossings
5 days ago

Winners revealed for £1.5bn decarbonisation deal

Fusion21 confirms places for 40 firms: Full list
4 days ago

Cladding firm fined £225,000 after fatal fall

Court hears how cherry picker didn't reach all parts of repair job
4 days ago

Completed buildings caught-up in Gateway 2 chaos

Developer distraught after dealing with Building Safety Regulator
5 days ago

Aviva submits plans for 34-storey City office tower

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

Murphy takes 40% stake in Aussie civils contractor

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

Moat seeks firm for £420m repairs and maintenance deal

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

Lynch takes over hotel for Sizewell plant operators

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

Subcontractors wanted across Scotland

Latest Constructionline event in Glasgow: Register now
5 days ago

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

Corrupt building bosses and E.ON project chief and QS sentenced
1 week ago

Contractor services