{"id":137114,"date":"2024-02-15T11:02:13","date_gmt":"2024-02-15T11:02:13","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=137114"},"modified":"2024-02-15T11:02:13","modified_gmt":"2024-02-15T11:02:13","slug":"construction-output-down-q4-2023-recession-confirmed","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/construction-output-down-q4-2023-recession-confirmed\/137114\/","title":{"rendered":"Construction output down in Q4 2023, as recession is confirmed\u00a0"},"content":{"rendered":"

Construction output in Q4 2023 reflected the ONS’s news of a confirmed recession, as both quarterly and monthly output decreased<\/h2>\n

New work continues to deflate construction output, as both quarterly and monthly assessments showed a decline of 5.0% and 1.1%, respectively.<\/p>\n

Repair and maintenance remain buoyant, increasing 0.4% in December 2023 and 4.0% in Quarter 4 (Oct to Dec) 2023.<\/p>\n

Overall output saw a decrease of 1.3% compared with Quarter 3 (July to Sept) 2023, and monthly construction output is estimated to have decreased 0.5% in volume terms in December 2023.<\/p>\n

Three out of the nine sectors saw a fall in December 2023<\/h3>\n

Main contributors to the monthly decrease were seen in infrastructure new work, and private housing repair and maintenance, which decreased 6.4% and 1.1%, respectively.<\/p>\n

Total construction new orders decreased 13.1% (\u00a31,361m) in Quarter 4 2023 compared with Quarter 3 2023; this quarterly fall came mainly from the private commercial and industrial sectors, which decreased 18.1 % (\u00a3542m) and 27.6% (\u00a3320m), respectively.<\/p>\n

Mike Hedges, company operations director at Beard, said: \u201cMuch like we have seen throughout the last 12 months, both December and Quarter 4 saw the increasing trend of repair and maintenance over committing to brand-new projects. This is as much driven by the economic climate and tougher borrowing conditions, as it is the shifting focus among a number of our customers to prioritise the improvement of existing building assets.”<\/p>\n

Although minor, annual construction output continues to grow<\/h3>\n

The annual rate of construction output price growth was 3.1% in the 12 months to December 2023; this has slowed from the record annual price growth in May 2022 and June 2022 (10.7%).<\/p>\n

However, annual construction output increased by 2.0% in 2023 compared with 2022; this is the third consecutive year of annual growth.<\/p>\n

Economic adversity affects the entire supply chain<\/h3>\n

Richard Besant, director at Powdertech: “In our opinion, the relatively long construction cycle has led contractors and developers to place their budgets under intense scrutiny.<\/p>\n

“This inevitably led to delays or cancellation of developments, shrinking project scopes, and the specification of cheaper, imported, and often lower-quality materials<\/a>. This is having a knock-on effect which is negatively affecting UK building product manufacturers and suppliers alike.<\/p>\n

“Subcontractors will also bear the brunt. Principal Contractors are continuing to extend sub-contractor payment periods, resulting in a rise in insolvency and defaulting on loans across the industry.<\/p>\n

“From the asset owner\u2019s perspective, this high degree of economic uncertainty is leading to concerns that the eventual return on investment might not align with original expectations.<\/p>\n

“For example, occupancy rates in commercial properties are likely to be far lower than originally expected, increasing the financial risk. It\u2019s a perfect storm all the way down the supply chain, putting immense pressure on a sector that is still struggling to overcome the twin aftershock of Brexit and the Pandemic.”<\/p>\n

Russell Haworth, NBS and Glenigan’s CEO, remains optimistic<\/h3>\n

\u201cToday\u2019s GDP figures will come as little surprise to the construction industry, where a challenging economic climate has been putting the brakes on work starting on-site for some time. Restrained private sector investment, a housing market slowdown, weak UK economic growth, and high-interest rates have repeatedly knocked the sector, suppressing activity.<\/p>\n

“Despite the doom and gloom, I\u2019m hopeful. Glenigan\u2019s latest Construction Forecast<\/a>, based on analysis of our extensive database of active construction projects, suggests the end is in sight.<\/p>\n

“Our economists predict the construction industry will grow gradually (+8%) in the latter half of 2024, despite ongoing contraction in the first quarter. The prospect of a recovering economy and market certainty is set to lift consumer and business confidence, boosting the industry.<\/p>\n

“I want to remind those in the industry that although conditions remain tough for now, firm development pipelines are already pulling through to support a rise in non-residential verticals such as industrial and offices. Similarly, improved household spending is expected to lift activity in consumer-related verticals, including private housing and retail.<\/p>\n

“Hang in there, and there will be opportunities for hungry and agile contractors to target these growing markets and finish the year on top.\u201d<\/p>\n

\n<\/div>","protected":false},"excerpt":{"rendered":"

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