Construction industry’s growth eases for the fifth month running

Commenting on ONS construction output data for August 2021, Stacy Eden, co-head of real estate and construction at RSM, said: 

‘Construction output fell by 0.2 per cent in the month to August and is now 1.5 per cent below the pre-pandemic February 2020 level (with a dramatic 3.7 per cent drop in new work since February 2020). The picture since the start of the pandemic is mixed with infrastructure 45.4 per cent above and private commercial 26.3 per cent below their respective February 2020 levels in August 2021. Without the 45 per cent growth in infrastructure construction since February 2020 construction output would be over 5 per cent down on pre pandemic levels. 

‘Continuing shortages of essential materials were the main reasons for the decline. Subsequently the cost of building materials for all work in August 2021 increased by 23.5 per cent compared with August 2020, with the greatest annual price increases being imported plywood (78.4 per cent), fabricated structural steel (74.8 per cent), and imported sawn or planed wood (74.0 per cent).

‘It was expected that growth in the market would slow after the initial dramatic recovery from the pandemic, but bottlenecks in the supply chain and the labour force are now critical and causing input prices to rise at a record rate, resulting in the industry’s growth coming to a halt and reverse.

‘This is now the 5th successive monthly fall in construction output caused by the supply chain issues and rising prices. However, contractors still seem to be inundated with work and are struggling to satisfy demand. We can only hope that demand remains strong whilst the industry and the UK economy gets over the twin shocks of the pandemic and Brexit.’