Construction industry bounces back in January 2024 despite three-month decline, says RSM

Construction output decreased in the three months to January 2024. The fall came solely from a 4.5% decrease in new work, as repair and maintenance saw a 4% increase. The decrease in the three months came from sharp falls in infrastructure new work (9.3%) and private new housing (5.2%). 

However, monthly construction output is estimated to have increased 1.1% in volume terms in January 2024, following three consecutive monthly falls. The monthly value in level terms is £15.4m, with the monthly increase coming from rises in new work (1.1%) and repair and maintenance. 

In addition, the main sector contributors to the monthly increase were private new housing, and non-housing repair and maintenance. 

Commenting on the construction output data Kelly Boorman, partner and national head of construction at RSM UK, said: ‘There are reasons for cautious optimism despite the latest quarterly fall in construction output. The sharp quarterly falls in infrastructure new work and private new housing reflect the market reaching its nadir, especially housebuilders. It also highlights the need for government to mobilise large projects, not just committing to and awarding contracts. The industry continues to face challenges around planning and businesses are reporting that in some cases, it’s taking longer than 12 months for planning to be confirmed.’

She added: ‘However, the slight monthly uptick in January 2024 shows that output is starting to move in the right direction, helped by January being a relatively dry month. Encouragingly, housing transactions and house prices are starting to rise, which coupled with December 2023’s uptick in mortgages, will help to restimulate the housing market, which had reached its lowest point last year. Contractors continue to be selective about the work they commit to in order to protect their margins, but as interest rates have now reached their peak and start to fall, this will bolster the housing market. 

‘Following a relatively quiet budget for infrastructure and planning, but with a general election looming for later in the year, businesses will be hoping that government follows up with a long-term strategy, especially around workforce recruitment and retention, to deliver its ambitious infrastructure spend announcements in November 2023.’