ONS

Monthly construction output in June sees highest drop since December 2020



Construction output in June registered the largest monthly decline since December 2020, according to the latest ONS data.

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Monthly construction output fell by 1.3% for the third consecutive month, and 0.3% below the February 2020 pre-coronavirus pandemic level.

This is due to a decline in repair and maintenance (4.2%) offset by a small increase in new work (0.5%).

Non-housing repair and maintenance was the largest contributor to the monthly decline, falling by 4.5% (£123m). 

Private housing also saw monthly falls in June 2021, with repair and maintenance, and new work falling by 4.6% (£85m) and 3.2% (£97m) respectively.

Despite the monthly fall, construction output grew by 3.3% in Q2 2021 compared to the previous quarter.

Apart from Q3 2020, this is the strongest quarterly growth since Q3 2013, partly a by-product of the weak January 2021 in the base period.

In addition, total construction new orders grew by 17.6% (£1,998m) between April and June compared to Q1 2021.

The annual rate of construction output price growth was 3.4% in June 2021— the strongest annual rate since August 2019 (3.5%).

Brian Berry, chief executive at the FMB, said: “It’s concerning that construction output in June fell for the third consecutive month, declining by 1.3%. 

“Largely attributable to a 4.2% decline in repair, maintenance and improvement work, these figures paint a disconcerting picture for Britain’s smaller building firms, the majority of whom undertake repair, maintenance and improvement work. 

“It’s now clear that while construction’s initial recovery from the pandemic was impressive, it was not wholly assured in the long-term. 

“Action needs to be taken to limit the impact of the materials and skills shortages afflicting the sector, so that smaller builders’ business continuity is not threatened. 

“It’s vital that transparent allocation and pricing policies are implemented to enable SMEs continued and stable access to the materials their businesses require. 

“It’s similarly important that they continue to be supported in their training of the next generation of tradespeople through an extension to the heightened apprenticeship incentive payments that are in place currently.”

Stuart Law, CEO at Assetz Capital, added: “Difficulties accessing raw materials, labour shortages, increased transportation costs and the realities of post-Brexit trade have resulted in the perfect storm for the construction industry. 

“With private housebuilders starting to feel the strain more recently, these issues must not be ignored given the potential knock-on effects a significant decrease in housing construction would have on the wider market. 

“SME housebuilders in particular face significant challenges with suppliers favouring bigger housebuilders with large purchasing agreements for raw materials over their smaller peers.

“With expectations that house price growth will pick up pace again over the remainder of the year and well into 2022, shortages in new housing stock will only serve to inflate prices further – possibly outstripping the record levels seen this spring which would be very disappointing for many first-time buyers and those looking to upsize in the near future. 

“These risks to the wider market make it all the more crucial that housebuilders are afforded the support required to achieve the government’s target of building 300,000 new homes a year.”

Dave Sheridan, executive chairman at Ilke Homes, added: “Increased material prices are continuing to weigh down on the construction industry as the sector looks to rebound post-pandemic. 

“Therefore, more must be done to encourage innovative methods of delivery that can significantly cut waste and use materials more efficiently. 

“Technologies such as BIM can generate precise estimates of materials needed for each job, while offsite manufacturing, where homes are manufactured along production lines, ensures high levels of recycling are achieved."



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