Strong performance in May comes after months of flat growth
Private housebuilding output rose to the highest monthly figure on record in May, according to the latest official construction statistics published this morning.
The Office of National Statistics (ONS) said a 7.2% jump in private housebuilding output, month-on-month, left seasonally adjusted output of the sector at £3.51bn – 11.3% higher than the equivalent figure in 2021.
The news, which formed part of a stronger than expected increase in construction output overall, will come as a relief to the sector after several months of broadly stagnating housing output amid concerns over rising materials and labour costs, planning problems and rising interest rates starting to slow the market.
The ONS said seasonally adjusted housing output overall increased by 5.8%, to £3.92bn, following a fall in the much smaller public housing market of 4.5% in the month. This puts housing output overall at the highest level since August 2019 – but not the highest level since statisticians started recording monthly housing output in 2010.
The figures come after the first four months of the year saw housebuilding output stay broadly flat at around £3.7bn, amid concerns the build market had peaked. Recent data from the Department for Levelling Up Housing and Communities suggested that starts and completions were both sharply down in the first quarter of this year compared to the same period in 2021.
The news came as a surge in commercial work added to the private housebuilding increase drove a stronger than expected increase in construction output overall in May.
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Construction output increased by 1.5% in the month – the seventh consecutive monthly increase – to hit its highest level since monthly figures were first recorded in January 2010.
The increase came solely from new work, which was up 2.8%, with repair and maintenance dipping slightly, with the increase in new work driven particularly by the ongoing recovery in the commercial construction sector, which increased by 12% month-on-month.
Private housebuilding work also increased sharply, up 7.2% on the month – which is likely to come as a relief to the sector after several months of apparently stagnating numbers.
The Office of National Statistics said that seasonally adjusted data showed that construction output reached £15.05bn in May – which is the first time output has topped £15bn, seasonally adjusted, for a single month.
The level of output is now 4.1% above the February 2020 pre-covid level overall, with new work slightly down on where it was, and repair and maintenance slightly up.
The ONS said this high level of output was achieved despite “continual issues in sourcing certain construction products”, with “High costs for products such as concrete, bricks and timber are still mentioned” in its survey returns.
It added: “There are also ongoing shortages of many materials, particularly for the smaller sized firms. Also, significant mentions of higher fuel costs and VAT tax increases for red diesel have had an impact this month.”
Mark Robinson, group chief executive at procurement specialist SCAPE, said the return to growth would “come as a surprise to many across the industry”, given that the general consensus was that inflation was “curbing longer term development plans”.
He said: “With the political picture facing significant change, fixing the economy has been put on the back burner just as the construction industry faces a critical peak season.
“All eyes will be on the economic plans of the leading Tory candidates. Any suggestion that austerity could return, in a bid to tackle the national debt, might cause concerns that a slowdown in public sector investment could compound the decline we’re starting to see in the private sector.”
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