Monthly Construction Output Falls .2% in January 2025

MONTHLY construction output is estimated to have fallen by .2% in volume terms in January 2025.

The drop follows on from a decrease of .2% in December 2024, according to the latest Office for National Statistics (ONS) report.

Construction Output Falls

This reduction in monthly output came solely from a fall in new work (.7%) as repair and maintenance grew by .4%.

Drops in construction activity over winter are expected and anecdotal evidence from survey returns to ONS noted adverse weather, including heavy rain, snow and storms as having a negative effect on output.

At the sector level, three out of the nine sectors fell in January 2025. The main contributors to the monthly decrease were private commercial new work, and private housing new work, which fell by 6.1% and 1.8%, respectively.

Quarterly Increase

Construction output is estimated to have increased by .4% in the three months to January 2025. The rise came solely from an increase in new work (1.4%), as repair and maintenance fell by .9%.

The increase in construction output in the three months to January 2025 came solely from November 2024’s growth in output (.6%).

COMMENTARY

Slow Start, Positive Signs

Terry Woodley, MD of Development Finance at Shawbrook

Terry Woodley, MD of Development Finance at Shawbrook, commented: “The year is off to a slow start, with three out of the nine construction sectors reporting a fall in figures.

“There is confidence that this won’t be the case for the rest of the year however, following the Government’s continued calls to boost housebuilding through cutting planning red tape and streamlining processes, which is predicted to help councils deliver homes almost three times faster.

“Encouragingly, our latest research reflects how these measures are impacting property developers’ outlooks, with over 60% predicting that 2025 will see an improvement for both the residential and commercial property market. While the year has just begun, there are positive signs that this could be a stronger year for construction than recent months have shown.”

Tricky but Manageable

Damien Wynne, Q New Homes Co-Founder

Damien Wynne, Co-Founder of the housebuilder Q New Homes, said: “The construction sector faced a challenging start to 2025.

“This could be put down to a winter slowdown which sometimes means projects are delayed in the planning stage, however it is more likely the result of a hesitant economy.

“In February, the Bank of England lowered the base rate to 4.5%, which may help ease borrowing costs and support future growth in the coming months. However, it appears this has yet to translate into increased construction activity. While government incentives for infrastructure development and housing initiatives may provide some support, developers remain cautious.

“Repair and maintenance work had a surprising uplift in January, suggesting that household budgets may not be stretched so far that home improvement plans need to be shelved.

“For housebuilders, focusing on managing costs and choosing the right projects will be key to making the most of opportunities in what could still be a tricky but manageable year ahead.

External Pressures

Joana Palha, Associate Director at Ayming UK

Joana Palha, Associate Director at business management consultants Ayming UK, commented: “The drop in construction output underscores the persistent challenges facing the sector. External pressures such as mounting costs for supplies and labour, stricter environmental regulations and ongoing economic uncertainty continue to weigh considerably on the industry, and this latest decline is a reminder that growth in construction remains fragile.

“The Government is making all the right noises about construction being at the heart of economic growth, and many of the recently announced measures like the planning reforms are – on face value – sensible. That said, sentiment is patchy and firms across the industry are struggling with a range of pain points that are preventing them from scaling and innovating. Our own research found that one in five construction businesses suffer from a lack of available skills and talent, with 45% prioritising short-term results over long-term growth and innovation.

“Innovation and growth come hand in hand, and we need to focus on the former to kickstart growth in the construction sector. This means greater support for construction firms in helping them access the necessary technology, skills and funding to increase output and productivity.”

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