Construction work falls to lowest level in a year

January saw the lowest level of construction work in almost a year, as ongoing economic uncertainty and heavy rain blighted the industry, according to official statistics.  

The value of work across all construction sectors for the month was £14.8bn, a 1.7 per cent fall from December 2022, the Office for National Statistics (ONS) reported on Friday (10 March). The last time the monthly figure was lower than this was February 2022, when it was £14.7bn. 

Work volumes also fell 1.7 per cent in January compared with the previous month. The decline was the steepest seen month-on-month since last June. 

Anecdotal evidence suggests that general economic uncertainty was leading to delays, cancellations and less work being commissioned, particularly in the housing sector, the ONS said. 

Major homebuilders have sounded warnings about a sharp drop-off in new home sales due to weakening demand. The government’s long-running Help to Buy scheme for first-time buyers is due to end this month, but homebuilders are calling for a new “targeted” scheme to be launched in the chancellor’s spring budget next week. 

The overall fall in construction volumes was partly due to a 4 per cent drop in new work, offset by a 2 per cent increase in repair and maintenance work, according to the ONS. 

“Further anecdotal evidence highlighted the mixed impact of heavy rainfall in the first two weeks of January, with outdoor work being affected negatively, but repair and maintenance work seeing an increase because of the weather,” the ONS said. 

Across the industry sectors, five out of nine saw a fall in output in January. The worst-hit were new infrastructure work and new private housing jobs, which fell 6.5 per cent and 3 per cent respectively.

Fraser Johns, finance director at Beard Construction, said the figures could be partly down to higher borrowing costs and some clients “holding back on their commitment to larger projects”. 

Clive Docwra, managing director of property and construction consultancy McBains, meanwhile, said the fall in infrastructure work was a “particular worry”, as the sector had “propped up the industry’s performance over the last few months”. 

Despite the gloom in construction, separate ONS figures published this morning showed the UK economy as a whole bounced back more than expected in January with gross domestic product rising 0.3 per cent compared with December 2022. The growth was ahead of expectations and driven by the services sector, it said. 

And, earlier this week, the latest Purchasing Managers’ Index data showed the construction sector experienced a “robust increase” in business activity in February, as supplier delays reached their lowest level in three years.