Construction output rises 1.5% in May (ONS)


Construction output in May rose 1.5% from the previous month, the seventh consecutive month of volume growth to a record high of £15.1bn.

May’s increase came solely from an increase in new work, of 2.8%, as repair and maintenance activity fell slightly, down 0.4% on the month, according to the Office for National Statistics.

At the sector level, the main contributors to May’s rise were new private commercial work and new private housing, which jumped 12.1% and 7.2%, respectively.

The data comes after ONS figures for April were revised up 0.3% from a fall of 0.4%. May’s overall net asset value is the highest since records began in January 2010.

Construction output in May this year was 4.1%, or £598m, above the pre-pandemic level of February 2020. New work was slightly below, by £3m, the February 2020 level, while repairs and maintenance were £601 million above the February 2020 level.

The recovery to date, since the plunges at the start of the pandemic, has been mixed at a sector level, with infrastructure at 19%, or £356m, above and private retail at 21.2%, or 524 million, below their respective February 2020 levels. in May this year.

Construction output rose 3% in the three months to May 2022, providing a longer-term view of activity across the sector, with increases seen in both new work and in repair and maintenance at 2.4% and 4.1%, respectively. This is the seventh consecutive growth in the three-month three-month series, and the strongest growth seen since June 2021, which reached 4%.

McBains, managing director of real estate and construction consultancy, Clive Docwra, said: “These numbers are a real tonic given continuing inflationary pressures, rising building material prices and the war in Ukraine, and suggest that the sector is finally emerging from its struggles. of the pandemic.

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

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

“Uncertainty over who will be the next Prime Minister also means that there will be doubts about the direction of policy in areas such as housing and infrastructure, which will mean that some investors will delay committing to longer-term projects.”

Assetz Group general director Stuart’s Law adds:Wherease today’s figures reveal a record surge in the construction industry, the price of key materials and labor shortages continue to make business untenable for many small and medium size companies.

A record number of construction companies in the UK went bankrupt last year as small businesses grapple with skyrocketing construction costs and backlogs in the planning system, rising to 3,400 in the year to April.

Rising costs, caused by inflation, Brexit and material shortages are just some of the challenges that disproportionately affect smaller builders. As more businesses begin stockpiling materials, as product costs reach new heights, many SMBs don’t have excess cash to purchase supplies in advance or the ability to transfer l cost increase on the customer.

As a result, what should be a profitable period for small and medium-sized businesses is actually becoming a losing period and many SMEs are actually going bankrupt.

Banks are visibly withdrawing finance from SMEs and the government has been reluctant to support or revitalize the SME construction sector. In 1988, small developers were responsible for four out of ten new homes.

Today it is around 10%. If this continues, we risk a huge crisis in the construction sector with even more SMEs going bankrupt and hopes of meeting the government’s target of building 300,000 new houses each year dwindle.

The ONS data comes after the Bank of England raised interest rates five times in a row since December to 1.25% and inflation hit 9.1% in May, a 40-year high. year.

The UK economy grew by 0.8% in the first quarter of this year, and rose 0.5% in May after falling in April and March, according to other ONS data, partially trained by construction growth, although economists are concerned about the slowdown cconsumer spending in front of rising energy and food pricess.

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