Storms Curtail Construction Output in February 2022

CONSTRUCTION OUTPUT decreased by 0.1% to £14,610 million in volume in February 2022, according to the latest official figures from the Office for National Statistics (ONS). This was the first monthly decrease since October 2021, following the revised 1.6% increase in January 2022 and following three consecutive months of growth.

The ONS latest figures back up anecdotal evidence suggesting Storms Dudley, Eunice and Franklin brought heavy rain across much of Great Britain between 16 to 21 February 2022. For the construction industry this caused delays and some projects to be suspended. This was due to more working days being lost on sites and premises, than normal for this time of the year. However, some businesses reported a positive impact as they picked up repair and maintenance work caused from storm damage.

The drop in monthly construction output in February 2022 came from a decrease in repair and maintenance (0.5%) as new work saw a slight increase of 0.1% on the month.

Meanwhile, other anecdotal evidence from returns received for both the Monthly Business Survey for Construction and Allied Trades and the Business Insights and Conditions Survey (BICS) suggested some of the issues in sourcing construction products remained. High costs and shortages of materials are still an ongoing problem, particularly for the smaller sized firms.

Construction Output in Sectors

At the sector level, the main contributors to the decline in February 2022 were infrastructure, and non-housing repair and maintenance, which decreased by 2.5% and 0.9% respectively.

Above Pre-Covid Level

The level of construction output in February 2022 was 1.1% (£155 million) above the February 2020 pre-coronavirus (COVID-19) level. New work was 3.7% (£354 million) below the level, while repair and maintenance work was 10.2% (£509 million) above it.

Quarterly Figure

Despite the monthly decrease, construction output rose 2.4% in the three months to February 2022. This is the strongest growth in the three-month on three-month series since June 2021 (4.0%). Similar increases were seen in both new work, and repair and maintenance (2.2% and 2.6% respectively). It follows a rise in new orders of 9.2% in Quarter 4 (Oct to Dec) 2021, compared to the three preceding months.

COMMENTARY

Clive Docwra MD of McBains

Serious Underlying Concerns

Clive Docwra, Managing Director of property and construction consultancy McBains, said:

“Today’s statistics are a setback coming after a strong return in output over the last three months.

“Although Storms Eunice, Dudley and Franklin had an impact on work delays, more serious underlying concerns over factors such as energy price rises, disruption due to the Ukraine crisis and rising inflation are triggering nervousness both from investors and in the construction sector itself.

“One positive is that demand remains strong as new work overall increased slightly, but the government missed a huge opportunity last week to provide a boost to the industry by not introducing measures to improve home insultation in its energy strategy.  Not only would this have helped households with rising energy costs, but a programme of retrofitting work would provide support for smaller players should there be a noticeable downturn.”

Set to Suffer

Brian Berry, Chief Executive of the Federation of Master Builders

Brian Berry, Chief Executive of the FMB, said: “Construction as a whole is on up year on year, but local builders continue to operate in an extremely challenging environment, facing difficulties in sourcing affordable materials and labour. The FMB’s recent membership survey highlighted the severity of these pressures, with 95% of local builders reporting increased material costs and upwards of 40% struggling to recruit for key trades such as carpentry and bricklaying. Faced with rampant inflationary pressures and significant uncertainty regarding the economic impact of the war in Ukraine, smaller building firms look set to suffer at a time when consumers are tightening their belts.”

 “I urge government to take a proactive approach to reduce the difficulties faced by local building firms. A move that would act as a boost for builders and reduce long terms costs for consumers would be the introduction of a National Retrofit Strategy – a measure sorely missed in the Government’s Energy Security Strategy. This would create demand for retrofit projects, that local builders will then deliver and cut energy bills for customers.”

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