Construction output drops by 2% in April after strong growth in March

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construction output april

Construction output dropped by 2% in April 2021 following a strong increase in March, as both new work and repairs and maintenance levels fall

Construction output now stands slightly above its pre-pandemic February 2020 level, according to the latest ONS figures.

The level of construction output in April 2021 remains 0.3% above the February 2020 pre-pandemic level despite the monthly fall. While new work was 3.4% below the February 2020 level, repair and maintenance work remains 7.1% above the February 2020 level.

In contrast to the monthly fall, construction output grew by 5.1% in the three months to April 2021 compared with the previous three-month period, thanks to a 5.2% increase in new work and 4.9% increase in repair and maintenance.

The increase in new work in the three months to April 2021 was due to growth in all new work sectors – the largest contributor to this growth was private commercial new work, which grew by 7.4%. Private industrial was the only sector which did not grow, falling by 3.6%.

The increase in repair and maintenance in the three months to April 2021 was thanks to an increase in non-housing and private housing repair and maintenance, which grew by 6.2% and 6.6% respectively.

‘April is a cause for concern for the construction sector’

Commenting on the new construction output figures, Clive Docwra, managing director of McBains, said: “Output falling by 2.0% in April is a cause for concern for the construction sector, but may reflect the fact that growth over March was higher than expected.

“Today’s figures also show that although confidence is returning to the construction sector, this remains delicate and growth in specific work sectors is mixed.

“While overall output remains just above pre-pandemic levels, driven by an increase in repair and maintenance work, new work contracts declined which bucks recent growth trends.

“Private new housing work was the largest contributor to this fall, which will pose a risk to the government’s housebuilding targets.”

‘Potential for a perfect storm’

Fraser Johns, Beard financial director, added: “The fact that output dropped by 2% in April is likely to be more of a reflection of the very strong growth we saw in March.

“We’re still above pre-pandemic levels of output and during Q1 we saw a 5.1% increase in new work, according to today’s stats, which really points the way for how May and June have been unfolding.

“The sector is recovering at pace as we saw with the latest UK Construction PMI figures putting new business and orders at their highest level since 1997. But that is also putting huge demand on supply chains which are struggling with the current global shortage of materials.

“There is also huge demand for labour with the CITB’s Construction Skills Network this week saying an extra 217,000 workers are needed by 2025 to keep up with demand.

“Now more than ever it is crucial that the industry takes a collaborative approach in our relationships with suppliers and sub-contractors, in order to plan and mitigate for issues further down the line. Otherwise there is the real potential for a perfect storm to blow up and threaten to undermine the growth in the sector this year.”

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