ONS statistics show construction output fell in May

Picture by Jeriden Villegas on Unsplash

Monthly construction output is estimated to have decreased 0.2% in volume terms in May 2023 according to the latest figures released by the Office for National Statistics (ONS). 

This represents the third consecutive fall in the ONS' month-on-month series, with the monthly value in level terms at £15.36 million.

The decrease in monthly output came solely from a decrease in new work (0.4% fall), with repair and maintenance being flat (0.0%) on the month. 

At the sector level, four out of the nine sectors saw a fall in May 2023, with the main contributors to the monthly decrease seen in non-housing repair and maintenance and private housing new work, which decreased 2.5% and 1.7%, respectively.

Anecdotal evidence continued to indicate a slow-down in private housing, referencing customers' economic worries; however, some businesses across other sectors continued to report an easing in inflation.

An additional bank holiday was held for the coronation of King Charles III on 8th May 2023, which could in part have affected work, however, the statistics from ONS form part of a picture of decline also highlighted in the latest PMI survey and the Barbour ABI report.

Despite the monthly decrease reported for May, construction output saw an increase of 0.2% in the three months to May 2023 - the ninth period of consecutive growth in the three-month-on-three-month series.

However, this is the weakest growth since the decrease in the three months to August 2022, during which there was a 0.1% fall.

The increase in the three-month-on-three-month series came solely from a rise in repair and maintenance (2.5%), as new work saw a decrease of 1.3%.

Total repair and maintenance has weakened compared with the strength at the start of the year, with the largest positive contributor being private housing repair and maintenance, at 3.9%. 

Non-housing repair and maintenance (1.6%) was the other main contributor to the three-month-on-three-month increase, despite the decrease on the month.

Earlier this month, Barbour ABI chief economist Tom Hall noted planning applications activity has now been very low for three months out of the last four.

The main element that has changed over the last few months is the fall in the infrastructure sector, by 50% in some areas compared to 2022. 

“June’s planning activity provided further evidence, if it was needed, of the likely slowdown in construction over the second half of the year driven by inflation, rising interest rates and lack of consumer confidence," said Hall.

"Residential construction planning remains weak and continues to suggest house building will be greatly reduced over the year whilst new weaknesses are emerging elsewhere.”

The PMI report for June from S&P Global also showed construction output had fallen for the first time in five months, amidst a continued decline in housebuilding.

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