Construction output falls in May as adverse weather impacts industry

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construction output may
©️ Karl M

Construction output decreased by 0.8% in May, as businesses suggest the adverse weather conditions had a knock-on effect on new work and repair and maintenance

Monthly construction output dropped by 0.8% in May 2021 when compared with April largely due to declines in both new work (0.4%) and repair and maintenance (1.5%), according to the latest ONS figures.

The level of construction output in May 2021 was 0.3% (£43m) above the February 2020 pre-pandemic level. New work was 3.5% (£320m) below the February 2020 level, and repair and maintenance work was 7.5% (£363m) above the February 2020 level.

In contrast to the monthly fall, construction output grew by 6.3% in the three months to May 2021 compared with the previous three-month period, with increases in both new work and repair and maintenance of 6.6% and 5.8% respectively.

The increase in new work was thanks to growth seen in all sectors, the largest contributors to this growth were private housing new work and infrastructure, which grew by 7.4% and 9.7% respectively.

The increase in repair and maintenance was due to an increase in non-housing and private housing repair and maintenance, which grew by 9.0% and 4.7% respectively.

‘Fragile recovery’

Clive Docwra, managing director of property and construction consultancy McBains, said: “Given today’s figures show the second successive monthly fall in output after several months of steady growth, it shows just how fragile recovery remains in the construction sector.

“Adverse weather conditions during May undoubtedly contributed to this fall, but the fact that order books dried up is worrying for the industry, with new work contracts 3.5% down on pre-pandemic levels.

“On the plus side, the three months to May figures are more encouraging but to maintain this longer-term trend month-on-month growth will need to pick up again next month.

“In addition, a continued shortage of materials – in particular cement, electrical components, timber and steel – is in turn fuelling price rises for construction firms and increasing the risk of wider inflationary pressures.

“With commercial construction work expected to continue to pick up as offices return over the next few months, this materials shortage could also mean a bottleneck in the supply chain that means more projects may be put on hold, putting any revival at risk.”

‘A blip that threatens to become a much bigger problem later’

Fraser Johns, Beard finance director, commented: “The 0.8% fall in output in May, which follows a drop in April, should be viewed in the context of the three months to May, which saw continued growth of more than 6%.

“We are still at pre-pandemic levels and factors such as adverse weather in May, will have impacted output due to time lost on-site.

“In these last 3 months we have seen huge growth of almost 10% in infrastructure, which has a key role to play in terms of moving beyond the pandemic.

“But as we saw with UK Construction PMI stats also out this week, the good news in growth is in sharp contrast to the issue around supply chain delays, which are at historic levels, and the soaring cost of materials. It feels like we’re seeing more stories in the media of construction firms going bust.

“So, collaboration with suppliers and customers, and a proactive approach to procurement across the whole industry is going to be vital this summer, especially with concerns over labour shortages as foreign workers depart for the season. Without that, the blip we saw in May threatens to become a much bigger problem later on in the year.”

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