A Construction industry output down 1.7% in January.
The latest monthly bulletin from the ONS (the Office for National Statistics) reports that the industry’s output of £14,841 million in January 2023 was the lowest since February last year, falling by 1.7% in volume. The indications are that the main reasons for the slight decline were reductions in new work for the Infrastructure sector, which fell 6.5%, and for the Private New Housing sector with a drop of 3%.
Overall, the decline in new work amounted to a reduction of about 4%, but that blow was softened somewhat by a 2% rally in the Repair & Maintenance market for the month. On the face of it, the figures, which are backed up by similar numbers from the monthly Construction Purchasing Managers’ survey, make for a slightly gloomy picture when you consider that they come after a steady decrease of 0.7% from October 2022 through to January 2023.
On a far more cheerful note, it is important to note that the ONS report makes clear that the unusually heavy rain in the first half of January put a halt to a huge amount of construction work. So, there is every chance that the January figures represent nothing more telling than a temporary ‘dip’ in output value – and if the Purchasing Managers’ Index (PMI) is to be believed, as it generally is, the industry is already seeing growth again.
That said, there is no avoiding the fact that we are still working in very uncertain times with high borrowing costs making customers increasingly cautious about committing to major new project investments. As Mark Robinson, CEO of Scape, the public sector procurement agency, said of the ONS bulletin in the Construction Index,
“It’s unfortunate to see a dip in output after a resilient end to 2022 capped off a year of growth. But it indicates the uncertainty in the economy at the moment, and it’s difficult to know if growth will return soon.”
With that in mind, at least some of the news gives grounds for optimism that the industry’s cautious ‘wait and see’ mindset may begin to thaw as spring sets in, bringing a brighter outlook for the entire construction industry.