Growth in the construction sector lagged behind the rest of the UK economy in 2024, according to the latest official statistics.
Construction output increased 0.4 per cent last year, marking the fourth consecutive year of annual growth, the Office for National Statistics revealed this morning (13 February).
But new orders were at their lowest level since the initial Covid lockdown in 2020.
The ONS added that the sector fell short of the 0.8 per cent growth in overall UK GDP in 2024 and output fell by 0.2 per cent in December compared with November.
The government’s statistics agency said that construction growth last year was driven by repair and maintenance workloads, which rose by 8.5 per cent in 2024.
But the amount of new construction work last year fell by 5.3 per cent, with infrastructure work suffering the worst contraction at 9.3 per cent.
A strong final quarter (Q4) saw construction output grow by 0.5 per cent, or £241m, compared with the preceding three months.
The quarterly growth was driven by a 1.1 per cent increase in all new work, including a 4.3 per cent (£121m) growth in new public non-housing work and a 1.3 per cent (£127m) growth in private new housing work.
And the sector’s 0.4 per cent output rise in November outperformed all other sectors of the economy.
However, during the fourth quarter new orders fell by 2.4 per cent (£231m), according to the ONS, with the the decrease coming solely from a 23.5 per cent (£496m) fall in new infrastructure orders and a 19.7 per cent (£197m) fall in private industrial new work.
Construction saw a mixed Q4, with output falling 0.2 per cent in December on a month-to-month basis, as a 1.2 per cent growth in new work failed to make up for a 1.8 per cent drop in maintenance work compared with November.
Gareth Belsham, director of Bloom Building Consultancy, said: “Construction lurched rather than limped across the finish line at the end of 2024. After flatlining in October, jumping in November and then shrinking in December, total output across the industry was mixed.
“Question marks linger about how resilient the growth is. More than half of the nine subsectors tracked by the official data contracted in December.
“Of far greater concern is the continued slowing of the new orders pipeline. The total value of orders placed in the final quarter slumped by 2.4 per cent compared with the preceding three months.
“It now stands at the lowest level seen since the shutters came down on much of the UK economy during the first Covid lockdown of 2020.”
Scott Motley, head of programme, project and cost management at Aecom, said: “A month-on-month dip in output, particularly within a quarter of growth, wouldn’t usually in itself be a major concern for contractors.
“However, with growth forecasts being revised and economic conditions remaining challenging, they will be hoping that it’s not the first sign of a trend for 2025.”
Terry Woodley, managing director of development finance at commercial bank Shawbrook, was more optimistic. “The construction sector ended the year on a high, with Q4’s figures showing a quarterly increase in activity, despite a month-on-month decrease,” he said.
“Further clarification of the government’s next steps for reducing planning red tape and boosting housebuilding has been released, making developers feel more supported and hopeful for 2025.”
Clive Docwra, managing director of property and construction consultancy McBains, said: “There will be little surprise among the industry that December witnessed a fall in output, given the ups and downs of the previous 11 months.
“Despite the disappointing December return, the industry will take heart that new work orders actually grew during the month, but more importantly the fourth quarter of 2024 saw half a percentage rise in output, which is more than perhaps many expected.
“The recently published planning reforms and falling interest rates will hopefully inject new momentum into the housebuilding sector, although skills shortages and cost inflation on materials could still have an impact on significant growth across work sectors.”
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Will Ing