ONS Construction Output: May 2024
The construction industry plays a pivotal role in driving economic activity in the UK, reflecting both short-term fluctuations and long-term trends in the economy. This report delves into the performance of the UK construction sector in March 2024, focusing on key indicators such as monthly output, sectoral performance, quarterly trends, new orders, and price growth.
Monthly Construction Output
March 2024 witnessed a decrease of 0.4% in the UK’s monthly construction output in volume terms. This decline stemmed from reductions in both new work (a fall of 0.7%) and repair and maintenance (a decrease of 0.1%). The dip in output indicates a challenging operating environment within the construction sector during this period.
Sectoral Performance
At the sector level, five out of the nine sectors experienced a decline in March 2024. The primary contributors to this monthly decrease were infrastructure new work and non-housing repair and maintenance, which saw reductions of 3.6% and 2.4%, respectively. These declines highlight specific areas of weakness within the construction industry that merit further investigation.
Quarterly Construction Output
Quarterly construction output for Quarter 1 (Jan to Mar) 2024 saw a decrease of 0.9% compared to the previous quarter (Oct to Dec) 2023. This decline was solely driven by a decrease in new work, which fell by 1.8%, while repair and maintenance increased by 0.3%. The quarterly decline underscores broader challenges facing the construction sector over the short term.
Total Construction New Orders
Despite the quarterly decline in output, total construction new orders increased significantly by 15.9% (£1,436 million) in Quarter 1 2024 compared to Quarter 4 2023. This increase was primarily driven by private commercial new work and public other new work, which saw rises of 27.9% (£700 million) and 43.8% (£536 million), respectively. These figures suggest potential opportunities for growth and investment within specific segments of the construction industry.
Annual Rate of Construction Output Price Growth
The annual rate of construction output price growth stood at 1.5% in the 12 months leading up to March 2024. This represents a slowdown from the record annual price growth observed in May 2022 and June 2022, which reached 10.7%. The deceleration in price growth reflects broader economic dynamics and inflationary pressures affecting the construction sector.
In conclusion, the analysis of UK construction output in March 2024 presents a mixed picture characterised by monthly declines, quarterly challenges, and notable increases in new orders. While certain sectors and segments face headwinds, opportunities for growth and investment persist, supported by positive trends in new orders and moderate price growth. Moving forward, policymakers and industry stakeholders must remain vigilant to navigate the evolving landscape and capitalise on emerging opportunities within the construction sector.
