CIOB responds to third consecutive drop in construction output
CIOB has responded to the Office for National Statistics' construction output data for July 2021.
Today (10 September) the Office for National Statistics (ONS) released its data on construction output in Great Britain for July 2021.
To summarise, construction output fell by 1.6 per cent. As such, the level of output for July is below that of February 2020 (pre-COVID-19). In fact, this is the fourth consecutive month that construction has seen such a decline. The IHS Markit Survey published earlier this week showed similar results, with both collecting anecdotal evidence attributing the lack of growth to price increases, product shortages caused by supply chain issues and the lack of available transport capacity creating long wait times.
The decline in monthly output for July came mainly from private housing according to the ONS, who reported a decline in both new work for private housing (7.5 per cent) and repair and maintenance (6.2 per cent).
Repair and maintenance continued to decline in output for three months, primarily due to the fall in the private housing market. CIOB continues to advocate for the Government’s focus on retrofit, particularly if it wishes to reach its ambitious sustainability targets. In addition, the industry continues to face a shortage in skilled labour, especially in green skills. By improving the rate of retrofitting in private housing this can support employment in this field.
Infrastructure new work has continued to remain strong throughout the pandemic period (an increase of 3.7 per cent) with ONS anecdotal evidence suggesting that projects relating to warehouses and distribution centres were the main reasons for this. It is likely that new infrastructure work will continue to remain strong with more construction firms looking towards adopting Modern Methods of Construction (MMC) to speed up delivery of housebuilding and creating new routes for the transport of pre-fabricated materials.
Public housing repair and maintenance, private industrial new work and infrastructure new work were the only sectors that saw monthly growth in July (2.2 per cent, 19.7 per cent and 3.7 per cent respectively). Private industrial work has continued to rise since May 2021. This is a relatively small sector, but it has contributed significantly to construction output for July due to a growth in warehouses and distribution centres.
When asked by IHS Markit, survey respondents said that they were more optimistic about their growth prospects in the year ahead. This is a positive sign as restrictions have now ended in England and sites are returning to normal operations.
“Today’s figures from the ONS are not unexpected. These are indicative of the continuing problems the industry is facing in materials and skills shortages. The high demand of materials coupled with issues of short supply and lack of transport for goods is a global issue that will take some time to resolve. For construction to keep moving, it must be adaptable, and clients should be having discussions with their supply chain on how best to manoeuvre around the challenges we are experiencing. We are glad to see that respondents from IHS Markit are rightly optimistic about the year ahead, but CIOB remain wary of the effects of any future lockdowns on the economic recovery and our ability to build back better.”
Hew Edgar, Associate Director – Policy