Construction output volume shrank by 1.6% in July, a new report from the Office for National Statistics shows – which is below the volume recorded in February 2020.
At the same time, the level of construction out was 1.8% lower that seen in February 2020, equating to £257m, and new work was 3.2% below February 2020’s level, or £285m in value.
Meanwhile, repair and maintenance work was 0.6% lower than that seen in February 2020 – £27m.
On a monthly basis, new work dropped 1.1% and repair and maintenance fell 2.4%.
Of particular note was the private housing category, which was home to a 7.5% drop in new work and a 6.2% drop in repair and maintenance.
Market commentors are unanimous in naming supply chain problems and price rises as the main culprits for July’s poor showing in these metrics. Beard finance director Fraser Johns comments: “We are seeing the real long-term impact of the pandemic start to hit home.
“The supply chain issues and price rises which stem from the slowdown in production globally, and friction at the borders due to Brexit, have knocked customer confidence… this is a real concern in terms of future growth.”
And Naismiths director Gareth Belsham says: “It’s getting increasingly hard to dismiss construction’s supply woes as mere teething problems.
“Soaring prices for key materials… aren’t just eating into builders’ margins. Widespread shortages and long delays are creating a creeping sense of uncertainty that is prompting some developers to contemplate pausing their developments until things calm down.
“While sentiment across the industry remains generally upbeat, the supply chain problems are steadily stifling growth.”
McBains managing director Clive Docwra adds: “This is not a reflection of confidence in the market, but because of a continuing shortage of materials – especially imported timber which has seen price rises of more than 60 per cent over the last year – in conjunction with shortages in other materials and skilled labour resources.
“Price rises are already evident in recent tender returns which in turn could fuel wider inflationary pressures. Private housing and repair and maintenance have been responsible for leading a rise in output in recent months, but these sectors in particular require a lot of timber.
“Skills shortages are also biting hard, particularly in bricklaying, which is hampering work expansion so, as the CBI has said, adding bricklayers to the shortage occupation list will provide respite.”
