The construction sector saw a notable decline in output in July, with a 0.4 per cent drop, marking a reversal from June’s growth.
- Official data from the Office for National Statistics indicated a decrease in activity affecting various sectors, largely due to rising costs and election-related uncertainties.
- Private commercial and housing sectors experienced the most significant reductions, while some areas like public housing and industrial projects showed growth.
- The sector’s overall performance in the three months leading to July painted a more positive picture despite challenges.
- Industry experts expressed concern over the adjusted seasonal data, highlighting ongoing difficulties in managing material and labour expenses.
In July, the construction industry experienced a contraction with output reducing by 0.4 per cent, effectively undoing the growth observed in June. The Office for National Statistics reported this shift, attributing it to several factors including surging material and labour costs and uncertainties surrounding the general election. The figures revealed a 0.2 per cent drop in new work and a more severe 0.7 per cent decline in repair and maintenance activities.
Notably, activity diminished across five of the nine monitored sectors. The private commercial sector saw its new work decrease by 2.4 per cent, while private housing repair and maintenance fell by 1.7 per cent. Despite these declines, the private new industrial projects witnessed a rise of 3.6 per cent and public new housing increased by 1.8 per cent, showcasing some areas of resilience within the industry.
The total output value for the month was recorded at £19.03 billion. This downturn comes at a pivotal time, highlighted by Fraser Johns, finance director at construction firm Beard, who pointed to the context of the post-election period and its broader economic implications. Industry figures remained anxious, particularly because the reported data had been adjusted for seasonal variations and followed two months of recovery.
Clive Docwra, managing director of McBains, remarked on the unexpected setback in private new work figures, underscoring the industry’s anticipations for improvements post-election. Meanwhile, Terry Woodley from Shawbrook noted the persistent challenges that continue to hamper growth, citing increased expenses and the typical seasonal lull during the summer holidays.
However, the broader outlook for the construction sector up to July remains hopeful. The ONS reported a growth of 1.2 per cent in the three months leading to July, spurred by increases in both new work and repair and maintenance. This suggests a cautious optimism within the industry, bolstered by government housebuilding announcements that are expected to drive medium-term growth.
The construction industry’s July performance underscores current challenges but offers a promising outlook for future growth.
