Construction output in June dropped by the largest monthly amount seen since December 2020, the latest ONS figures show.
Output fell by 1.3% in June, the third consecutive monthly drop and 0.3% below the last pre-coronavirus pandemic level recorded in February 2020.
The figure is due to a decline in repair and maintenance (4.2%) offset by a slight increase in new work (0.5%).
Despite the monthly drops, quarterly growth increased by 3.3% which, apart from Q3 2020, is the strongest quarterly growth since Q3 2013 (3.6%).
However, ONS says the strong quarterly growth is partly a by-product of the weak January 2021 in the base period.
Total construction new orders grew by 17.6% (£1,998m) in Q2 2021 compared with Q1 2021; total new orders recovered in Quarter 2 2021 to above its pre-pandemic level for the first time at 1.6% (£214m) above the Q1 2020 level.
The annual rate of construction output price growth was 3.4% in June 2021; this was the strongest annual rate of construction output price growth since August 2019 (3.5%).
Commenting on the figures, Assetz group chief executive Stuart Law says: “Difficulties accessing raw materials, labour shortages, increased transportation costs and the realities of post-Brexit trade have resulted in the perfect storm for the construction industry.
“With private housebuilders starting to feel the strain more recently, these issues must not be ignored given the potential knock-on effects a significant decrease in housing construction would have on the wider market. SME housebuilders in particular face significant challenges with suppliers favouring bigger housebuilders with large purchasing agreements for raw materials over their smaller peers.
“With expectations that house price growth will pick up pace again over the remainder of the year and well into 2022, shortages in new housing stock will only serve to inflate prices further – possibly outstripping the record levels seen this Spring which would be very disappointing for many first-time buyers and those looking to upsize in the near future. These risks to the wider market make it all the more crucial that housebuilders are afforded the support required to achieve the Government’s target of building 300,000 new homes a year.”
