Monthly construction output increased by 0.4% in volume terms in August, according to the Office of National Statistics.

The latest data showed that this was the second consecutive monthly growth following the upwardly revised increase to 0.1% in July.

August was also the second highest monthly value level at £15bn, with May remaining at the highest since records started in January 2010.

The monthly construction output went up from a 1.9% increase in new work, while repair and maintenance saw a 2% decrease in the month.

Infrastructure, private industrial and private housing new work were the primary sectors that contributed to the rise, with increases of 5.3%, 4.3% and 1.7% respectively.

The level of construction output in August was 3.2% or £461m above the pre-Covid level in February 2020.

New work was 0.7% below its February 2020 level while repair and maintenance work was 10.6% above the pre-Covid level.

Alongside the monthly increase, construction output saw a slight increase of 0.1% in the three months to August.

This came from a 1.6% rise in new work, as repair and maintenance saw a 2.4% decrease.

These figures represent the tenth consecutive period of growth in the three-month-on-three-month series.

However, data found that this is the slowest rate of growth since the three months to October which saw a fall of 0.7%.

McBains managing director Clive Docwra says: “The moderate growth witnessed in August shows the construction industry is holding firm during a difficult period.”

“It’s encouraging that the rise in output is being driven by new work, and the fact that infrastructure, private industrial and private housing new work increased by 5.3%, 4.3% and 1.7%, respectively will be a tonic to the industry.”

“However, there are still bumps in the road to be negotiated. Material price inflation may be starting to fall, according to recent figures and from what our clients are telling us, but the cost of construction remains high and further volatility over the medium term can be expected as factors such as Russia’s invasion of Ukraine and the energy crisis bites harder.”

“And despite the increase seen in private investment, the risk of recession and high interest rates means some investors are still holding the pause button until the economic picture becomes much clearer.”

Meanwhile, Assetz Group chief executive Stuart Law says the data suggests that the “heatwave in July inhibited construction growth, but as the high temperatures cooled towards the end of August, activity started to increase again.”

“However, looking forward as we move out of summer, we cannot ignore broader socio-economic and political ongoings that are likely to have a significant impact over the winter months. The construction sector is among the industries that will be the hardest hit by the challenging economic environment.”

Law says this is “particularly significant for SMEs who are disproportionately impacted by exponential increases in the cost of materials, labour shortages, rising energy bills, supply chain issues and the looming threat of at least a modest recession driven by sharply rising interest rates”.

“This instability is also aggravated by uncertainty in economic policy that has often failed to prioritise small and medium sized businesses. As a result, we do expect construction to slow materially into 2023 as this combination of further factors comes to bear on the market.”

“While we have seen the UK construction industry welcome the new Energy Bill Relief Scheme from 1 October, the pressure will be on the government to uphold long-term support for the sector in the face of steadily rising energy bills.”

“Whilst macro-economic conditions can’t be easily solved, a key solution to this is supporting SMEs through innovative funding solutions so they can properly play their part in boosting construction, and most importantly, meeting the urgent need for new homes as we face a housing crisis in the UK.”

Earlier this month, Glenigan using data from its construction index predicted that headwinds in the construction industry will get even stronger in Q4 this year and into Q1 next year.

The index found that the Russia-Ukraine war and resulting materials, energy, and fuel price inflation as well as the introduction of new building regulations and a new government, have impacted confidence.

However, it suggests the market is showing signs of stabilising with index figures slightly up on the previous month’s figures. 

Glenigan says this implies the industry “is cautiously getting back on its feet, but there’s no doubt it will be an uphill battle”.