ONS puts health warning on latest construction statistics

New work rose slightly in April, by 0.9%, but repair and maintenance work fell 2.4%, attributed to a leveling off in activity after repair work peaked after the storms from February.

However, the latest figures from the Office for National Statistics (ONS) come with a health warning:

Estimates for April 2022 are subject to more uncertainty than usual due to the challenges we faced in collecting data“, said the ONS. “This has led to lower response rates than seen before the coronavirus pandemic.

The main contributors to the decline in output in April were repair and maintenance of private dwellings and new private commercial work, which fell 6.5% and 3.8%, respectively.

Despite the monthly decline, the level of construction output in April 2022 was 3.3% (£481m) above the pre-coronavirus level of February 2020; new work was 0.7% lower (£68 million), while repair and maintenance work was 11.0% higher (£549 million).

Since the drop in production at the start of the coronavirus pandemic, the recovery has been mixed, with infrastructure 35.6% (£669m) above and private businesses 27.2% (676m sterling) below their respective February 2020 levels in April 2022.

Despite the monthly decline in April, production in the construction sector increased by 2.9% in the three months to April 2022; this is the sixth consecutive growth in the three-month series over three months, with increases seen in both new work and repair and maintenance (2.2% and 4.0%, respectively ).

Gareth Belsham, director of national property consultancy and surveying firm Naismiths, said: “Economic gravity and weakening business confidence have finally caught up with the construction industry. As 2021’s momentum wanes, the downturn has turned into a slide – with the sector posting its first monthly decline in output in seven months.

“But so far it’s been a cooling rather than a slump. Private sector housing construction continued to grow in April, climbing 1.1% from March and 6. 5% from April 2021. There was also a big jump in construction in the industrial sector, up 7.6% on the month and a dizzying 48.7% last April.

“On a quarterly basis, the results are always positive. In the three months to the end of April, production rose a respectable 2.9%, down from the 3.8% posted in the first quarter of the year. But no one should be complacent. The new works pipeline is starting to slow, with new orders down 2.6% in the first three months of the year compared to the last quarter of 2021.

“Once strong investment cases are tested by soaring construction costs and nagging questions about what the demand for the completed project will be, and as a result, an increasing number of developers are thinking before committing. While many construction companies still have reassuring order books for the coming months, the future beyond is rapidly looking less rosy.

However, Beard Construction’s chief financial officer, Fraser Johns, was a little more optimistic. He said: “We should not be worried about the small monthly decline (0.4%) in production volume. This is a rebalancing of the numbers after they were temporarily inflated in March by a spike in demand for repair work after winter storms.

“Instead, we should focus on overall first quarter production, which shows more encouraging growth of 2.9% for the sector with April production more than 3% above pre-March levels. Covid.

“That said, the fall in private commercial work to more than 25% below pre-covid levels is a reminder that for some parts of the industry, the recovery remains fragile.

“As the year progresses and growing inflation continues to drive up material prices, the continued recovery will rely on open and honest conversations between key contractors, customers and the supply chain to ensure cost plans for program delivery are both robust and realistic for all parties.”

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