Construction output returns to growth in January, says ONS

Construction output is estimated to have decreased 0.9% in the three months to January 2024, according to the latest data from the Office for National Statistics.

This came solely from a decrease in new work (4.5% fall), as repair and maintenance increased by 4.0%.

The decrease over the three months came from infrastructure new work and private housing new work, which fell 9.3% and 5.2% respectively.

Main positive contributions came from non-housing repair and maintenance, and private housing repair and maintenance, which increased 3.2% and 3.3%, respectively.

However, monthly construction output is estimated to have increased 1.1% in volume terms in January.

This follows three consecutive monthly falls, with the monthly value in levels terms at £15,422 million in January 2024.

The increase in monthly output came from increases in both new work (1.1%) and repair and maintenance (1.2%). 

At the sector level, six out of the nine sectors saw a rise in January.

The main contributors to the monthly increase were private new housing, and non-housing repair and maintenance, which increased 2.6% and 1.9%, respectively.

Scott Motley, head of programme, project and cost management at infrastructure consultancy AECOM, said: “January’s increase in output raises hopes that the construction sector is turning a corner despite the ongoing challenges in the housebuilding market, which has a significant impact on overall performance.

“Inflationary issues have receded since the start of the year, and most long-term cost issues within contracts have either been renegotiated or worked through. 

“That said, the cost of borrowing remains heightened at a time when we’re seeing tender activity becoming more competitive in some subsectors.

“Most contractors remain reasonably confident in their financial health but, the fact that this is being billed as a year for modest growth suggests some firms will struggle as we head into the spring.

“Indeed, many will be watching carefully as housebuilder earnings season – a bellwether for others – gets underway this week.”