Record High for May 2022 Construction Output Value

MAY 2022 construction value level achieved a record high of £15,053 million – the highest value since records began in January 2010.

The month also saw construction output growth for the seventh consecutive month – increasing by 1.5% in May 2022.

This follow’s revision of April’s growth, upwards to 0.3%, according to the latest figures from the Office for National Statistics (ONS).

However, ONS points to anecdotal evidence from monthly construction business surveys and data which highlight ongoing issues in certain construction products’ availability with shortages of many materials, particularly for smaller sized firms. High costs for products such as concrete, bricks and timber are also still mentioned, as well as higher fuel costs and VAT tax increases for red diesel.

Despite these challenges, ONS says order books remain strong, as shown in Quarter 1 2022, when total new orders were 13.7% above their Quarter 4 2019 level – the last full quarter not affected by coronavirus.

May 2022 Construction Growth

The increase in monthly construction output in May 2022 came solely from an increase in new work (2.8%), as repair and maintenance saw a slight decline, decreasing 0.4% on the month.

At the sector level, the main contributors to the increase seen in May 2022 were private commercial new work and private new housing, which increased by 12.1% and 7.2% respectively.

Pandemic Recovery

The level of construction output in May 2022 was 4.1% (£598 million) above the February 2020 pre-coronavirus (COVID-19) pandemic level; new work was slightly below (£3 million) the February 2020 level, while repair and maintenance work was above (£601 million) the February 2020 level.

The recovery to date, since the falls at the start of the coronavirus pandemic, is mixed at a sector level, with infrastructure 19.0% (£356 million) above and private commercial 21.2% (£524 million) below their respective February 2020 levels in May 2022.

Quarterly Figures

Alongside the monthly increase, construction output increased by 3.0% in the three months to May 2022, with increases seen in both new work, and repair and maintenance (2.4% and 4.1% respectively).

This is the seventh consecutive growth in the three-month on three-month series, and the largest growth seen since June 2021 (4.0%).

COMMENTARY

Worrying Trend

Brian Berry, Chief Executive of the Federation of Master Builders

Brian Berry, Chief Executive of the Federation of Master Builders (FMB) said: “The positive numbers in the latest ONS stats mask a worrying underlying trend. Activity in the repair, maintenance and improvement sector (RMI) continues to fall, likely influenced by consumers juggling rising cost of living pressures. RMI work is the backbone of the construction industry and the lifeblood of small, local builders. If the decline continues, insolvencies will follow. The ONS is right to point to the pressures of high costs of construction products, lack of materials, high fuel costs and the ban on red diesel as having an impact on the sector. All these costs add up and must be passed on to a reluctant customer base who are looking to make savings.”        

Real Tonic

Clive Docwra MD of McBains

Clive Docwra, Managing Director of property and construction consultancy McBains, said:“These figures are a real tonic given continuing inflationary pressures, increases in the price of building materials and the Ukraine war, and suggest that the sector is finally emerging from its struggles as a result of the pandemic.

“The significant increases in private commercial new work and private new housing – 12 per cent and 7 per cent respectively – suggest a fresh wave of confidence is spreading among investors.

“But the figures also show that recovery since the decline at the start of the pandemic is mixed at sector levels.  Infrastructure contracts may be 19 per cent above levels of February 2020, but private commercial work is still 21 per cent below that period.

“The uncertainty over who will be the next Prime Minister also means there will be doubts over the direction of policy in areas such as housing and infrastructure, which will translate into some investors holding off on committing to longer term projects.”

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