November construction output increased by 3.5%, reaching the largest monthly rise since March 2021, and the highest construction output since September 2019, as demand for work increases and supply chain pressures ease

Evidence from the Monthly Business Survey for Construction and Allied Trades and the Business Insights and Conditions Survey (BICS) suggested that supply chain issues experienced over recent months had eased somewhat as businesses were able to obtain materials to complete and start projects.

The unseasonal dry and mild weather experienced in November 2021 also helped, as this meant that construction sites did not lose many working days across the month.

The survey also indicated that whilst the prices of construction materials continue to be high, the rate of growth has eased in comparison with previous months.

‘Eight out of nine sectors report an increase’

The 3.5% increase in construction output during the month of November represents a rise of £496m compared with October 2021, with eight out of the nine sectors seeing an increase.

Infrastructure, new work, and private housing were the largest contributors to the monthly rise in November 2021, increasing by 11.4% (£286 million) and 5.5% (£160 million) respectively.

Infrastructure new work last saw stronger monthly growth in May 2020, with evidence suggesting renewable energy projects along with road and rail developments are contributing significantly to the large increase in this type of work over the last 18 months.

Private housing, repair, and maintenance was the only sector to have fallen in November 2021, decreasing by 2.4% (£49 million).

26% of construction businesses reported they had to change suppliers or were unable to source materials, goods, or services needed from within the UK.

While still higher than the proportion for all industries sampled in the BICS, the percentage for construction businesses has seen a notable drop from 35%, in late October.

The improvements in the supply chain alongside an increased demand, are likely factors to explain the strong monthly growth in output in November 2021.

Three-month on three-month construction output growth

Construction output rose 1.6% (£671 million) in the three months to November 2021, marking the first three-monthly rise since July 2021. Similar increases in both new work and repair and maintenance contributed to the growth.

Infrastructure new work and private housing new work made the largest contributions to the three-monthly rise, increasing by 3.6% (£273 million) and 1.8% (£164 million) respectively.

Private commercial new work and public housing new work were the only two sectors to have seen falls in the three months to November 2021, decreasing by 3.2% (£176 million) and 7.5% (£94 million) respectively.

Industry comments

Sean Keyes, managing director, Sutcliffe:
 
“Reflecting on the latest Construction ONS figures, you have to go back to September 2019 before the pandemic to see such strong figures in the construction sector, with the current output figure sitting at 99.8.
“These figures show an increase in output in the construction sector that is higher than approx 1% of pre-Covid results and it is certainly a very positive time for a lot of sectors as we head towards month two of 2022.
“The bounce back loans that many businesses were granted during the pandemic are quickly being spent and invested back directly into construction, we’re finding that many sectors are remaining focused on their work and thankfully we are managing to get hold of materials which is a positive.
“There is however a shortage of quality staff and labour at the moment brought on by Brexit and Covid, but I hope this changes and we can look forward to what should be a strong Q1 both for Sutcliffe and the construction sector as a whole.”
Mark Robinson, group chief executive at SCAPE, said:
“Further growth in the autumn, set against the context of the long-term inflation and labour supply challenges that characterised much of last year, clearly demonstrates the industry’s resilience.
“However, the impact of Omicron in exacerbating ongoing staff shortages means that the sector is likely to endure further disruption over the coming months.
“Public sector construction will continue to make up a significant volume of the industry’s output. But, with the overhaul of the government’s procurement standards gathering pace, those looking to capitalise will need to invest heavily in their ability to deliver enhanced social value and meet the net-zero ambitions of clients in the sector.”

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