ONS: February output down 1.9%


The Workplace for Nationwide Statistics (ONS) estimates that month-to-month development output decreased 1.9% in quantity phrases in February 2024 to £15,229m.

This follows a 1.1% enhance in January 2024.

The lower in month-to-month output got here from decreases in each new work (a 2.3% fall), and restore & upkeep (a 1.4% fall). Anecdotal proof from survey returns prompt results of heavy rainfall led to delays in deliberate work.

On the sector degree, eight out of the 9 sectors noticed a fall in February 2024, with the principle contributors to the month-to-month lower seen in non-housing restore & upkeep, and personal industrial new work, which decreased 2.5% and 4.0%, respectively. The one sector to see ab enhance was personal housing restore & upkeep, which grew by 0.2%.

Throughout three months to February 2024, development output in Nice Britain is estimated to have decreased by 1.0% – with new work falling 3.0% however restore & upkeep growing by 1.6%.

Whereas this looks like gloomy information, February was two months in the past now. More moderen surveys recommend the trade has turned a nook. The Building Buying Managers’ Index (PMI) for March indicated a development in output in March, for the primary time since final August, albeit at a really modest charge. However that March development would possibly simply have been catching up on labored that was washed out in February somewhat than precise market development.

Regardless of the true image is, insolvency practitioners are nonetheless anticipating loads of enterprise from the development sector. Allan Kelly, restructuring advisory associate at FRP, stated: “February’s knowledge outlines the development trade’s unsure state, having posted development on the very begin of the yr. General output is closely linked to the housebuilding sector, which has been subdued by excessive rates of interest for greater than 18 months now and continues to behave as a drag on efficiency.

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“With the bottom charge forecast to fall within the coming months, inflation dropping – each of which ought to assist put a reimbursement into individuals’s pockets – and the federal government having not too long ago revealed its long-awaited steering on second stairways in tall buildings, contractors might be hopeful of a resi-led restoration via the course of the summer time.

“Insolvency ranges are prone to stay excessive for the foreseeable future although. Commerce credit score phrases have turn into harder as a consequence of latest collapses, whereas the winter’s poor climate has held up initiatives and put a pressure on cashflow. This at a time when the price of doing enterprise stays elevated and corporations proceed to work via the consequences of earlier inflation on contracts. 13-week rolling cashflow forecasts ought to very a lot stay the instrument of alternative for administration groups making an attempt to handle order books successfully.”

Scott Motley, head of programme, challenge and price administration at development advisor Aecom, stated: “The development trade might be dismayed that output has slipped again into decline, as corporations battle to collect momentum in a sector that hasn’t notched up consecutive months of development since 2022.

“Long run prospects are enhancing although, with the Financial institution of England poised to start chopping charges – boosting growth exercise as we enter the hotter months which might be probably the most fruitful for contractors.

“Nevertheless, corporations will nonetheless have to be alert to persistent challenges – specifically elevated labour prices and an more and more aggressive tender market – that are hampering contract supply whereas squeezing margins.”

Beard finance director Fraser Johns was altogether extra upbeat, saying: “After January’s enhance in development output bucked the pattern of the earlier three consecutive month-to-month falls, it might be tempting to assume that February’s figures are a moist squib.  Nevertheless, it’s evident from the ONS and our expertise that poor climate had quite a bit to do with it, with heavy rainfall resulting in delays in deliberate work and reducing output in February.

“Whereas there are ongoing pressures on the trade, together with some remaining uncertainty round inflation, we shouldn’t let these newest figures shadow a brighter outlook and we shouldn’t let this small decline in output dampen the rising optimism we’re seeing on the bottom.”

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