May construction output shows positive signs of growth, but business concern remain, says RSM
13 July 2022
In May 2022, the volume of monthly construction output increased by 1.5%, the seventh consecutive monthly growth following the upwardly revised increase to 0.3% in April 2022, according to the latest Office of National Statistics figures. This is a record high in monthly-level terms (£15,053 million) since records began in January 2010.
The increase in monthly construction output in May 2022 came from an increase in new work (2.8%), driven mainly by increases in private commercial new work (12.1%) and private new housing (7.2%). Construction output in May was also 4.1% (£598 million) above the February 2020 pre-coronavirus level.
Commenting on the construction output data Kelly Boorman, partner and national head of construction at RSM UK, said: ‘The latest figures show a record high for construction output, with growth driven by increases in orders for private commercial new work and private new housing. Despite these positive signs of growth, the sector should expect further challenges ahead, as costs for key materials including concrete and bricks soar, exacerbating lead times on projects.
‘The continued increase in construction output and new works orders suggests further growth and recovery, reflecting the resilience of the sector in response to adverse conditions brought about by the pandemic and geopolitical conditions. However, businesses remain uncertain about pipelines slowing down, as inflation continues to squeeze margins and impact lead times on materials. In addition, the continued uptick in private commercial new work is due to production catching up with the backlog of projects delayed during the pandemic.
‘While the increase in output shows positive signs of recovery for the sector, this growth will be short-lived and we can expect a fall in June output, as businesses manage the pipeline of work alongside ongoing labour shortages and inflationary material prices, reinforcing long-term sector concerns regarding resource.’
