12 October 2023
In August 2023, the volume of monthly construction output decreased by 0.5%, following an upwardly revised decrease of 0.4% in July. The decrease in monthly output came solely from a decrease in new work of 1.5%, offset slightly by an increase in repair and maintenance work (1%).
In addition, the main sector contributors to the monthly decrease were private commercial and private new housing, which decreased 4.1% and 1.4% respectively. Construction output saw an increase in the three months to August 2023; due to a 0.9% increase in new work and a 0.9% increase in repair and maintenance.
Commenting on the construction output data Kelly Boorman, partner and national head of construction at RSM UK, said: ‘This month’s latest decrease in construction output does not come as a surprise, and reflects the ongoing slowdown in the residential market as well as market sentiment. The data is finally showing that the previously strong pipeline of work is drying up post-Covid, with the industry unsure about its future after working through major backlogs of work. The prolonged weakening in the residential market is likely to continue, due to interest rates and inflation causing market uncertainty for both contractors and the consumer. However, as affordable housing providers keep a view on their longer-term volume requirements, we will see further stimulation in the market as they start to increase their volumes, but this won’t happen overnight, and will require some injection of government incentives and investment.
‘In recent months, the availability of labour has improved, and material prices stabilised, but, with the government’s recent announcement of its scrapping of HS2 adding to market uncertainty and further shrinking the pipeline, regional infrastructure and residential works will be brought to a halt. Therefore, we can expect the downward trend in construction output to continue for a while, until the government can mobilise other infrastructure projects, which takes time. It is essential that government commit to investing the allocated £36bn as promised to enhance regional connectivity, providing construction businesses with investment and incentivisation to futureproof its workforce and replenish the supply chain with new infrastructure projects.’