July Construction Output Boosted by New Work

MONTHLY construction output is estimated to have grown by 0.2% in July 2025, according to the latest data from the Office for National Statistics (ONS).

This follows a rise of 0.3% in June 2025.

The rise in July construction output came solely from an increase in new work (0.3%), as repair and maintenance was flat on the month (0.0%).

In the three months to July 2025, total construction output is estimated to have grown by 0.6%

Over the three-month period, new work increased by 1.0%, and repair and maintenance grew by 0.1%.

At the sector level, four out of the nine sectors grew in the three months to July 2025. The main contributors to the increase were private housing repair and maintenance, and infrastructure new work, which grew by 3.8% and 2.1%, respectively.

INDUSTRY COMMENT

Output Slowly but Surely Increasing

Terry Woodley, MD of Development Finance at Shawbrook

Terry Woodley, MD of Development Finance at Shawbrook, commented: “Construction output is slowly but surely increasing, following a continued rise in activity recorded in June. This stems solely from new work, which took over from repair and maintenance as strong drivers of activity in the sector.

“Looking ahead, attention will undoubtedly turn towards the Autumn Budget, currently slated for November. The hope is that the Chancellor will continue to build on the commitments made in the Spring Statement earlier this year, which included additional funding to address the skills shortage, as well as landmark planning reforms to cut red tape.

“With the 1.5 million new homes target still outstanding, and continued noise around large infrastructure projects still making headlines, developers will be keen to receive updates and further support.”

Just One Piece of the Puzzle

Richard Cook, Senior Economics Director at Pegasus Group

Richard Cook, Senior Economics Director at Pegasus Group, said: “The Government is desperate for good news at the moment, and this morning’s construction output data showing an increase for a second month in a row will be a welcome boost.

“Whilst this could be a sign of the dark clouds hanging over the sector finally passing, the multitude of economic challenges plaguing the sector remain and mean any self-celebrations from the Government should be halted in their tracks.

“Construction output is just one piece of the puzzle, and whilst their increase is a positive and very welcome indicator, it’d be wrong to assume the UK construction industry is fighting fit.

“Past today’s headline figure, low productivity growth across almost the entire economy, a tough graduate jobs market, labour shortages in construction and concerns about looming tax rises in the upcoming Budget are all contributing to the sombre economic mood.

“If the Government were to make progress on addressing these challenges, it will actually help boost growth in the construction sector which in turn can help UK plc and give more money to the government to invest in growth.

“Only through making progress on addressing these various challenges will the construction sector be able to turn the corner and start taking strides towards its 1.5 million new homes target. For now, this goal is merely a wishful economic fantasy.”

Real Test to Arrive in Coming Months

Dr David Crosthwaite, BCIS Chief Economist

Dr David Crosthwaite, Chief Economist at BCIS, said: “Output growth may have been minimal in July but it was positive amid a challenging macroeconomic environment.

“Despite ongoing cost pressures and labour shortages, activity was ticking up with robust annual increases in new work output across both public non-housing and private industrial sectors.

“The real test, however, will arrive in the coming months in the lead up to the Autumn Budget. Any negative speculation regarding the fiscal position is likely to stall growth as investors wait for clarity.

“What the government shouldn’t do is reign back investment by cancelling or postponing projects in an attempt to improve the public finance position. This would likely stall any fragile growth in construction output going forward.”

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