Construction output down 0.8% in May

Construction output fell 0.8% in May 2021, although remained slightly above its February 2020 level, according to UK Construction output revealed by the Office for National Statistics (ONS).

New work and repair and maintenance both contributed to the monthly decline in May 2021, with anecdotal evidence from businesses suggesting adverse weather conditions were a contributing factor.

There were declines in both new work (0.4%) and repair and maintenance (1.5%).

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The level of construction output in May 2021 was 0.3% (£43m) above the February 2020 pre-pandemic level; new work was 3.5% (£320m) below the February 2020 level, repair and maintenance work was 7.5% (£363m) above the February 2020 level.

However, construction output in fact grew by 6.3% in the three months to May 2021 compared with the previous three-month period, with increases in both new work and repair and maintenance of 6.6% and 5.8% respectively.

The increase in new work (6.6%) in the three months May 2021 was due to growth seen in all sectors, the largest contributors to this growth were private housing new work and infrastructure, which grew by 7.4% and 9.7% respectively

The increase in repair and maintenance (5.8%) in the three months to May 2021 was because of growth in non-housing and private housing repair and maintenance, which grew by 9.0% and 4.7% respectively.

Gareth Belsham, director of Naismiths, said: “Torrential rain may have dampened the official output figures for May, but there’s no doubting the heat still in the construction sector.

“With both demand and sentiment still very strong, few are worrying about the second successive monthly drop in output.

“April and May’s figures are no disaster, but they do look anaemic compared to the extremely rapid growth posted at the start of the year.

“On a quarterly basis the direction of travel is firmly upwards – up 6.3% compared to the previous three months – and total output is still above its pre-pandemic level.

“Within the industry the star performers are infrastructure – now up a fifth on its pre-pandemic level – and private sector housebuilding, both of which continued to expand in May despite days lost to tropical downpours.

“Nevertheless the second stumble in a row shows there is nothing irresistible about the construction industry’s sprint.

“Severe supply side issues are throwing obstacles in projects’ path – average wages are rising as contractors fight to lure workers, and material costs are surging as demand far exceeds supply.

“The difficulty of getting hold of key materials like steel and timber risks knocking existing projects off course and is pushing up tender prices for future work.

“But frustrating though these issues are, they are speed bumps for an industry well versed in handling boom and bust.

“The phenomenal rate of growth seen in the early months of 2021 was always going to be hard to maintain, and overall things are now settling into a better rhythm.”