Construction volumes lifted by 0.8% in October, with output hitting £15.2bn, the highest monthly level since records began in January 2010, says the Office for National Statistics.
The rise was the fourth monthly volume rise in a row, driven by 1.3% growth in repair and maintenance jobs and a 0.5% lift in new work, although some experts say this data hides a lag in market activity.
At the sector level, five out of the nine sectors saw a rise in October, with the main contributors being private new housing, and non-housing repair and maintenance, which increased by 2.9% and 1.7%, respectively.
The department says: “Anecdotal evidence continues the narrative around the increased prices for certain construction products, however, annual price growth is starting to ease from the high level in mid-2022; despite the current high prices, the construction industry is maintaining growth, and new orders books remain strong.”
The level of output in October was 4.8% above the February 2020 pre-pandemic level.
A broader measure, saw construction rise 1.1% in the three months to October, the 12th consecutive period of growth in the three-month-on-three-month series. Increases came solely from growth in new work, at 3.1%, as repair and maintenance activity suffered a 2.1% fall.
Mather and Murray Financial independent financial advisor Samuel Mather-Holgate says: “This may appear to be good news, but terminology is hiding the bad. Increases in ‘new work output’ is when builders finish brand-new construction jobs.
“What this doesn’t show is the significant decline in new projects commencing due to a chasm of confidence in the economy.
“Most major builders’ share prices are around half of what they were at the start of the year and that’s because they are finishing off their current projects and sitting on land as they know they won’t sell anything at the moment. “This decline will continue, and start to filter through to this Office for National Statistics data in a few more months. Don’t expect to see a rebound until the summer.”
Beard construction director Mike Hedges adds: “The slight surprise for the sector here is that as of October, the Office for National Statistics construction output data is still showing a rise in output.
“This is the fourth consecutive monthly growth, with October 2022 showing the highest level of construction output, £15.bn, since records began in January 2010, with output being almost 5% higher than before the pandemic began in February 2020.
“This comes on the same day that gross domestic product rose by 0.5% in the last month, slightly outstripping the 0.4% expected, although the overall trend over the past three months was a decline of 0.3% compared to the previous quarter.
“Much of the rise in construction was led by new housing, with private commercial new work dropping back in volume and it is likely that when the statistics for November and December are released, they will also show further slight decreases in volume.
“On the ground, the construction sector has been dealing for months with inflationary pressures and the rising cost of commodities like fuel, steel and other materials. The effect of continuing price inflation and a challenging new business environment won’t be properly understood until 2023 is fully underway.
“The headline inflation figure does not reflect the true rise in prices of materials like brickwork and aluminium – the price of which is being driven up by up to 50% by increased fuel costs and global disruption to supply chains.”
