Construction output continues to fall, says ONS

Quarterly construction output fell 1.3% in the last three months of 2023, according to latest data from the Office for National Statistics.

The October-December fall came solely from a decrease in new work (5% fall), as repair and maintenance increased by 4%.

Monthly construction output is estimated to have decreased 0.5% in volume terms in December 2023; this came solely from a decrease in new work (1.1% fall), as repair and maintenance increased 0.4% on the month.

At sector level, three out of the nine sectors saw a fall in December 2023, with the main contributors to the monthly decrease seen in infrastructure new work, and private housing repair and maintenance, which decreased 6.4% and 1.1%, respectively.

Overall annual construction output increased by 2% in 2023 compared with 2022; this is the third consecutive year of annual growth.

Total construction new orders decreased 13.1% (£1,361m) in Quarter 4 2023 compared with Quarter 3 2023; this quarterly fall came mainly from the private commercial and industrial sectors, which decreased 18.1 % (£542m) and 27.6% (£320m), respectively.

The annual rate of construction output price growth was 3.1% in the 12 months to December 2023; this has slowed from the record annual price growth in May 2022 and June 2022 (10.7%).

Commenting on the construction output data, Kelly Boorman, partner and national head of construction at audit, tax and consulting firm RSM UK, said: "Despite the latest monthly and quarterly falls for construction output in December, the industry remains cautiously optimistic due to committed spend on infrastructure projects, with businesses also reporting that the pipeline has grown due to new projects being awarded. 

“Additionally, with mortgage rates falling sharply in recent weeks, growth in mortgage applications will help to restimulate the housing market, which had reached its lowest point last year. 

“The industry is also eagerly awaiting interest rate drops which, having now reached their peak, are expected to fall in Q3 2024, which will further bolster the housing market. 

"However, the setback is that industry needs to see mobilisation of these projects, not just commitments and awarding of contracts. 

“The sharp decrease in infrastructure new work in Q4 2023 (6.4%) highlights the need for mobilisation, and with a budget and general election on the horizon, businesses will be hoping the latest infrastructure spend announcements will be more than just a government pipe dream.”

Click here to read the full report.