Construction output falls below pre-pandemic level

The latest figures from the Office for National Statistics (ONS) suggest that monthly construction output fell by 1.6% in volume terms in July 2021, putting the level of output now below its pre-pandemic February 2020 level.

Work output
The ONS reports that the level of construction output in July was 1.8% (£257 million) below the February 2020 pre-pandemic level, with new work 3.2% (£285 million) below the February 2020 level. However, repair and maintenance work was 0.6% (£27 million) above the February 2020 level.

Anecdotal evidence from businesses blamed the ongoing price increases and product shortages, with new work and repair and maintenance falling by 1.1% and 2.4% respectively below February 2020 levels.

What’s more, the decline in monthly output in volume terms in July 2021 came mainly from private housing, which saw falls in both new work, and repair and maintenance of 7.5% and 6.2% respectively.

However, recovery to date is mixed at a sector level, with infrastructure being the best performing sector over the pandemic at 35.7% (£649 million) above its February 2020 level, while private commercial was the worst performing sector over the pandemic at 20.3% (£481 million) below its respective February 2020 levels in July 2021.

Construction output also fell by 0.6% in volume terms in the three months to July 2021, the first three-monthly fall since February 2021, driven by a fall in repair and maintenance of 2.9%, mainly because of a fall in private housing repair and maintenance, of 8.3%.

However, new work saw an increase of 0.7% in the three months to July 2021, with the largest contributors to this growth being infrastructure and private industrial, which grew by 17.5% and 8.2% respectively.

Thoughts from the FMB…
In response to the figures, Brian Berry, chief executive of the Federation of Master Builders (FMB), said: “Disappointingly, we once again see construction output fall, putting it below pre-coronavirus levels. We know that material price increases and skills shortages are contributing to the decline, with members telling us this is their number one issue.

“According to a recent FMB survey, 98% of builders are facing material price increases. Worryingly, new work and repair and maintenance in private housing are the main causes for this decline, which are the backbone of the workload for small builders. I’m concerned that despite the high demand for home improvements, something which could stimulate economic recovery, we see this sector on the decline. We must pull together as an industry and press the government to ensure these issues are dealt with quickly.”

>> You can check out more news about how the materials shortage is impacting the construction industry here.