Construction Activity Dwindles in October 2023

MONTHLY construction output is estimated to have decreased 0.5% in volume terms in October 2023, according to the latest Office for National Statistics (ONS) figures.

The drop in activity follows an increase of 0.4% in September 2023, with the monthly value of activity in October 2023 at £15,485 million.

Activity Dwindles

The decrease in monthly output came solely from a decrease in new work (1.7% fall), partially offset by an increase in repair and maintenance (1.3%) on the month.

At the sector level, three out of the nine sectors saw a fall in October 2023. The main contributors to the monthly decrease were seen in private new housing and private commercial new work, which decreased 5.2% and 1.2%, respectively.

Anecdotal evidence suggested that heavy rainfall and strong winds led to delays in planned work in October 2023. ONS says a high number of comments from businesses noted the negative effect of storms specifically.

Quarterly Figures

In the three months to October 2023, construction output also saw a decrease, of 0.3%. The decline came solely from a decrease in new work (2.0% fall), as repair and maintenance held up with a small increase of 2.2%.

INDUSTRY COMMENT

Propping up the Industry

Brian Berry, Chief Executive of the FMB

Brian Berry, Chief Executive of the FMB commented: “After the seemingly positive figures released last month, which had seen construction output grow by 0.4% for September, it is disappointing to see that October’s growth has declined by 0.5%. Repair and maintenance building work has once again been positive, but unlike previous months the gains were not large enough to mask underlying issues, such as a decline in new housing.”

“Overall, the construction sector is struggling with the three months to October seeing a 0.3% decline, which is worrying, but small local builders committed to repair, and maintenance work are propping up the industry. The largest concern for smaller builders will be those engaged in house building, who are seeing a tough market. With a new Housing Minister in place, pragmatic solutions are needed to help kick start the creation of new homes, or better yet, a long-term plan for housing.”

Persistent Problems

Terry Woodley, MD of Development Finance at Shawbrook, said: “Persistent inflation and supply chain problems are likely behind these modest figures. It’s been a tough year for developers, with labour costs putting pressure on projects, and a significant 36% of developers grappling with the escalating prices of materials, according to Shawbrook’s research.

“We’re optimistic that the Government’s efforts to streamline the planning system and ease some of its burdens will boost developers’ prospects for 2024.”

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