The latest ONS November 2022 construction output shows flat growth in volume terms, as decreasing new work and rising repairs balance each other out
ONS figures suggest that monthly construction output is estimated to have flat growth (0.0%) in volume terms in November 2022; this follows a downwardly revised increase of 0.4% in October 2022.
The flat growth in monthly construction output in November 2022 came from a decrease in new work (0.4% fall), offset by an increase in repair and maintenance (0.6%) on the month.
Infrastructure new work saw the largest increase over the period
Private new housing and private housing repair and maintenance were the largest negative contributors to the flat growth in November 2022, decreasing 4.8%, (£172m) and 1.7% (£41m), respectively. The largest positive contributions were from infrastructure new work and non-housing repair and maintenance, increasing 4.2% (£87m) and 2.4% (£68m), respectively.
The large decrease in private new housing follows an increase of 2.3% in October 2022 (£81m), whereby private new housing was the largest contributor to the increase to monthly growth in October 2022.
The level of construction output volume in November 2022 was 3.1% (£452m) above the February 2020 pre-coronavirus (COVID-19) pandemic level; new work was 3.4% (£327m) below its February 2020 level, while repair and maintenance work was 15.5% (£778m) above the February 2020 level.
Construction output saw an increase of 0.3% (£140m) in the three months to November 2022; the increase came solely from growth in new work (1.3%) as repair and maintenance saw a decrease (1.2% fall). This is the first increase in the three-month on three-month series since July 2022 (0.5%), though the report notes that part of the June 2022 dip was due to working days lost over the Queen’s Platinum Jubilee.
Extensive rainfall had a negative impact on onsite work, but generated repair work in other areas
The Met Office confirmed that rainfall was above average throughout November 2022 and businesses cited that for the construction industry, the rain caused difficult working conditions.
However, for some businesses the rainfall generated more work relating to repairs.
Industry responses to the ONS November 2022 construction output report
Mike Hedges, Beard director said: “After three months of just 0.3 per cent growth, the flattening of construction output in November comes as no surprise and may well herald a further decline in the coming months. The sector has long been expecting – and preparing – for this to trend. Behind the headline figures, however, construction output seems to tell a tale of two sectors.
“The levelling off is very much driven by significant falls in new housing and private housing repair and maintenance, which may be more directly related to wider pressure on the housing market from recent interest rate hikes.
“Conversely, infrastructure new work and non-housing repair and maintenance continued to grow at significant levels – 4.2 and 2.4 per cent respectively.
“In other words, investment in housing construction seems to be contracting much faster than commercial work and the fact that there is still some growth in the sector provides an element of reassurance. In addition, concern around the cost of materials is also less notable with energy costs starting to stabilise during Q4, 2022.
“However, the figures tell us that economic conditions are tightening and the sector has been right to prepare itself for some contraction in the forthcoming period ahead.
“As a sector, we must remain agile in responding to evolving market conditions, while upholding our values in delivering quality for our customers and continuing to pay suppliers promptly.”
Economic uncertainty continues to hamper growth
CEO of Alliance Fund, Iain Crawford, commented:
“A softening in construction output during November was always likely following what is traditionally a stronger summer period, but particularly with the addition of growing uncertainty surrounding the wider property market.
“With both the construction of new housing and new work seeing a reduction in output, it appears as though the sector may have paused for thought more prematurely than usual, in order to fully consider the implications of the wider economic backdrop and how best to negotiate them in 2023.
“This trend is likely to remain until the sector shifts fully through the gears this year but we don’t foresee any notable long-term decline in construction output in 2023.”
