Construction Output Falls in April as RMI Reduces

MONTHLY CONSTRUCTION output decreased by 0.4% in volume terms in April 2022, in the first monthly decline seen since October 2021, according to the latest figures from the Office for National Statistics (ONS).

The decrease in monthly construction output in April 2022 came from a fall in repair and maintenance (2.4%), which was offset slightly by a rise in new work (0.9%). The fall is partly a by-product of the growth (3.0%) in March 2022, because of the demand caused by the repair work experienced from storms Dudley, Eunice and Franklin in February 2022.

At the sector level, the main contributors to the decline in April 2022 were private housing repair and maintenance, and private commercial new work, which decreased by 6.5% and 3.8%, respectively.

Pandemic Recovery

Despite the monthly fall, the level of construction output in April 2022 was 3.3% (£481 million) above the February 2020 pre-coronavirus (COVID-19) level; new work was 0.7% (£68 million) below, while repair and maintenance work was 11.0% (£549 million) above.

The recovery to date, since the falls at the start of the coronavirus pandemic, is mixed at a sector level, with infrastructure 35.6% (£669 million) above and private commercial 27.2% (£676 million) below their respective February 2020 levels in April 2022.

Quarterly Figures

Despite the monthly decrease, construction output increased 2.9% in the three months to April 2022. This is the sixth consecutive growth in the three-month on three-month series, with increases seen in both new work and repair and maintenance (2.2% and 4.0%, respectively).

ONS cautions that estimates for April 2022 are subject to more uncertainty than usual because of data collection challenges with lower response rates than before the pandemic.

INDUSTRY COMMENT

Fragile Foundations

Clive Docwra MD of McBains

Clive Docwra, managing director of property and construction consultancy McBains, said: “After a strong increase in output in March, today’s figures serve as a reminder that recovery in the construction sector is still subject to dips.

“Work as a result from the storms earlier this year had propped up growth in February and March and masked that the industry is still struggling in the face of continuing pressures including rising inflation, the high cost of building materials and uncertainty as a consequence of the war in Ukraine.

“It means the recovery is based on fragile foundations.  Private commercial new work, for example, decreased by 3.8% in April and confidence among some developers remains low with the likelihood of further interest rate rises leading to a pause on some significant investments.”

Brian Berry, Chief Executive of the Federation of Master Builders

Struggling to Stay Afloat

Brian Berry, Chief Executive of the FMB, said: “Signs of stagnation in construction output should concern policymakers at a time when the smallest firms in the sector are already struggling to stay afloat. The cost-of-living crisis hitting consumers, coupled with persistent difficulties in affording pricey building materials and recruiting skilled tradespeople, mean that the months ahead will become increasingly difficult to navigate for these local construction firms. At a time when these local building firms should be recovering from the pandemic, they are instead entering another period where survival will be their primary aim.

“It’s imperative that the Government works to ease the pressures, whether via a VAT cut on all home improvements to support the struggling repair, maintenance, and improvement sector, or via the upcoming planning reforms to reverse the decades of decline experienced by small housing developers.”

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