Third Monthly Construction Growth in September 2022

IN THE third consecutive monthly growth, construction output increased 0.4% in volume in September 2022.

September shows the highest level of construction output, valued at £15,125 million, since records began in January 2010, according to the latest figures from the Office for National Statistics (ONS).

September’s growth follows small upward revisions, to 0.6% in August 2022 and 0.2% in July.

September 2022 Growth

The monthly increase came from new work (0.6%) and repair and maintenance (0.2%) growth on the month.

Sub-Sectors

Five out of the nine sub-sectors saw a rise in September 2022, with the main contributors seen in public housing repair and maintenance, and infrastructure new work, which increased 11.3% and 2.8%, respectively.

Pre-Pandemic Comparison

September’s construction output was 4.0% (£575 million) above the February 2020 pre-coronavirus pandemic level. New work was 0.3% (£29 million) below the February 2020 level, while repair and maintenance work was 12.0% (£604 million) above it.

Quarterly Growth

Alongside the monthly growth, construction output saw an increase of 0.6% in Quarter 3 (July to Sept) 2022. The rise came solely from growth in new work (2.4%), as repair and maintenance saw a decrease (2.2% fall).

Total construction new orders increased 6.4% (£774 million) in Quarter 3 2022 compared with Quarter 2 (Apr to Jun) 2022. This quarterly growth came mainly from private commercial new orders, which rose 27.7% (£832 million).

The annual rate of construction output price growth was 10.1% for the 12 months to September 2022; this has slowed slightly from the record annual price growth in May 2022 (11.5%).

The ONS cautions that figures for September 2022 are affected by the bank holiday for the funeral of Queen Elizabeth II, when some businesses closed.

COMMENTARY

Confidence Still Evident

Clive Docwra MD of McBains

Clive Docwra, managing director of property and construction consultancy McBains, said: “At a time when the economy is falling into recession, the construction sector continues to demonstrate resilience in the face of economic challenges with this increase in output, albeit moderate.

“Order books currently remain strong in many work sectors, and the 5% increase in new orders in private commercial work is a sign that confidence is still in evidence.

“However, given that the longest recession since records began is forecasted, it is inevitable the industry faces a rocky road ahead. Medium term growth is slowing, as indicated by today’s statistics showing the weakest quarterly growth for a year.

“Looking further ahead, as well as this meaning some projects being curtailed due to falling economic confidence, a major risk is that crucial efforts to decarbonise building stock could be sidelined. The government could help by giving the green light to a retrofitting programme, which will not only support the industry but help keep net zero targets on track.”

Act to Get Planning Unstuck

Brian Berry, Chief Executive of the Federation of Master Builders

Brian Berry, Chief Executive of the FMB: “It’s worrying to see a contraction in new work for private housing. We know there are long term issues facing SME house builders, with output dropping over the years. Many exited the sector in the last recession and with another one looming as the economy contracts by 0.2% we need to avoid a repeat. The Government needs to act to get small house builders unstuck from the complex planning system and back to delivering high quality, diverse homes, using skilled local workers. The Autumn Statement provides an opportunity for the Government to ensure local planning authorities have the resources needed to speed up the planning system and help deliver the homes this country needs.”

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