UK exits recession- but construction still suffers 0.9% drop in Q1

The UK has officially exited its latest recession- but construction output was held back by the decline in housebuilding

The latest ONS figures have confirmed that the UK economy as a whole has moved out of recession, with 0.6% growth in the first three months of 2024- but the figures for the construction sector were markedly less promising.

Quarterly construction output saw a decrease of 0.9% in Quarter 1 (Jan to Mar) 2024 compared with Quarter 4 (Oct to Dec) 2023; this came solely from a decrease in new work (1.8% fall), as repair and maintenance increased by 0.3%.

Total construction new orders increased 15.9% (£1,436m) in Quarter 1 2024 compared with Quarter 4 2023; this quarterly increase came mainly from private commercial new work and public other new work, which increased 27.9% (£700m) and 43.8% (£536m), respectively.

March’s mixed weather was to blame for a decrease in monthly output

Monthly construction output is estimated to have decreased 0.4% in volume terms in March 2024; this came from decreases in both new work (0.7% fall) and repair and maintenance (0.1% fall).

At the sector level, five out of the nine sectors saw a fall in March 2024, with the main contributors to the monthly decrease seen in infrastructure new work, and non-housing repair and maintenance, which decreased 3.6% and 2.4%, respectively.

Feedback from the Monthly Business Survey suggested that the mixed weather had indeed had a mixed impact on March 2024’s construction, with wet weather continuing to decrease output, but improvement across some sectors  because of warmer weather.

Housebuilding will continue to be a focal political topic as the general election looms

The annual rate of construction output price growth was 1.5% in the 12 months to March 2024; this has slowed from the record annual price growth in May 2022 and June 2022 (10.7%).

Clive Docwra, managing director of property and construction consultancy McBains, said:  “With the broader economic data showing the economy grew by 0.6% in the first quarter of 2024 and is recovering from last year’s technical recession, it demonstrates that growth in the construction sector is struggling to keep pace with the wider recovery.

“A particular worry is that five of the nine construction work sectors experienced a decline in March. Infrastructure contracts, which have propped up much of the industry in recent months, saw a 3.6% decrease.

“A continuing number of variables – not least an impending general election – means that we expect the sector will continue to experience ups and downs over the next few months.”

CEO of APRAO, Daniel Norman, was more optimistic, commenting: “After falling by almost -2% in February, it will be frustrating for many that March saw monthly construction figures fall again, especially when forecasts suggested the data would show positive growth.

“However, the numbers specific to new homes paint a more promising picture with output actually increasing on the month[to 0.61]. This points to a potentially brighter construction picture for the coming months, and will certainly be welcome news to the incumbent political parties ahead of a general election campaign in which the delivery of new homes is going to be a central theme.

“But there still remains a lot to do as new housing output remains almost -10% down on this time last year.”

Recent Articles

Related Stories

Leave A Reply

Please enter your comment!
Please enter your name here