June construction output shows signs of new works slowing as output prices grow, says RSM
12 august 2022
In June 2022, the volume of monthly construction output decreased by 1.4 per cent, following an upwardly revised 1.8 per cent increase in May 2022. This is the first decrease since October 2021 (0.9 per cent) following seven consecutive months of growth, according to the latest Office of National Statistics figures.
The decrease in monthly construction output in June 2022 came from a fall in both new work (2.0 per cent) and repair and maintenance (0.2 per cent).
However, despite the slight monthly decrease, the annual rate of construction output price growth was 9.6 per cent in the 12 months to June 2022, the strongest annual rate of price growth since records began in 2014. In Q2 2022, total construction new orders also decreased 10.4 per cent compared with Q1 2022, which is the largest quarterly fall in new orders since Q4 2020 (11.7 per cent).
Commenting on the construction output data Kelly Boorman, partner and national head of Construction at RSM UK, said: ‘The latest figures show that while there has been a slight decrease in monthly construction output, the significant fall in new orders in Q2 of 10.4 per cent (£1,355 million) shows that activity in the sector is now slowing down, highlighting how activity had been driven by a backlog of work brought about by the pandemic.
‘While this had previously provided the industry with short-term business certainty, the sharp fall in quarterly new orders coupled with the 9.6 per cent increase in the annual rate of construction output prices reflect the impact of soaring energy prices and inflationary material prices, with many businesses now retendering their projects and bringing new work to a halt.’
She added: ‘Along with the challenges of a slowing pipeline and new work orders, the industry has seen a significant number of administrations, as businesses contend with global supply chain issues and look to retender their projects to combat inflation and cash flow challenges.’
