The volume of monthly construction output fell by 1.7% in January, says the Office for National Statistics (ONS).
This is the weakest level witnessed since June 2022, when the ONS recorded a fall of 2%.
And January’s value of new construction, at £14.8bn, is the lowest since February 2022’s £14.7bn.
The ONS details that new work fell by 4% while repair and maintenance helped balance this out by rising 2%.
It also highlights anecdotal evidence pointing to an uncertain economic narrative and heavy rainfall in the first half of January halting new work.
Private new housing fell by 3% and infrastructure new work by 6.5% – these being the two main drivers behind the headline figure fall. In total, five out of the nine sectors counted saw a decrease in activity, the ONS report shows.
McBains managing director Clive Docwra says: “Today’s figures are proof that the cloud of economic uncertainty is still impacting construction output levels – and across the majority of work areas.
“Falling client demand is now severely affecting private housebuilding, while a fall in new orders across all work sectors will set alarm bells ringing.
“The industry is also hamstrung by skills shortages, and reports suggest the government may make changes after next week’s Budget to the points-based immigration system to allow construction to recruit more foreign workers.
This would be welcomed, as fewer EU nationals and the withdrawal of older workers from the labour market have shrunk the industry workforce, with the number of vacancies at the end of 2022 standing at 46,000 – almost double pre-pandemic levels.
“However, we also need client demand to be there – and today’s figures show that to be a concern.”
Meanwhile, Beard Construction finance director Fraser Johns comments: “The new year certainly didn’t offer the new start many in construction would have hoped for with a decrease in output in January and a fall in new work. This is driven by continued economic uncertainty and higher borrowing costs contributing to some clients holding back on their commitment to larger projects.
“There was, however, an uptick in repairs and maintenance works, thus despite clients feeling less inclined to pull the trigger on high-value blockbuster jobs, there will be those still pushing ahead with improving and maintaining current stock. To combat a volatile and uncertain landscape, businesses must remain flexible and raise their profile in the markets that will be strongest in the next 12 to 18 months.
“While this snapshot of January shows the challenging start to the year for many of the industry’s key sectors, businesses will be encouraged by a much stronger February. Some areas still continued to show weaknesses, especially the housing sector, but a lessening of supply chain pressures and recessionary fears helped to boost both new orders and overall confidence.
“However, this shows the somewhat ‘hot and cold’ nature of the sector, which is driven by uncertainty in such difficult times. Staying close to suppliers and stakeholders will remain a key priority, as will being able to adapt to changing market conditions and project demands.”
