New commercial work pushes output to record high

Construction output has reached a record high – growing by 1.5 per cent in May, largely thanks to new commercial work.

Figures published by the Office for National Statistics (ONS) showed that output for all work increased from £100.8m in April to £102.3m in May.

May’s figures marked the seventh month of consecutive growth, after the office upwardly revised April’s output to record a 0.3 per cent increase. It had originally reported a decline.

New commercial work was the “sole” reason for May’s increase, according to the ONS, after the sector climbed 2.8 per cent.

New private commercial work and private housing were the main contributors, rising by 12.1 per cent and 7.2 per cent, respectively.

But the ONS noted a slight decline for repair and maintenance work, which suffered a 0.4 per cent drop.

The office added that order books “continued to remain strong”, despite challenges such as high product costs and VAT tax increases for red diesel, all of which had an impact on the sector.

Compared with pre-COVID levels (February 2020), output for May was 4.1 per cent, or £598m, better off. Repair and maintenance work also fared better, growing by £601m. New work, however, was slightly below the February 2020 level, down £3m.

Responding to the latest ONS figures, Clive Docwra, managing director of property and construction consultancy McBains, said they were “a real tonic” for inflationary pressures and increasing materials costs.

But he warned that recovery from the pandemic was mixed at sector levels: “Infrastructure contracts may be 19 per cent above [the] levels of February 2020, but private commercial work is still 21 per cent below that period.

“The uncertainty over who will be the next prime minister also means there will be doubts over the direction of policy in areas such as housing and infrastructure, which will translate into some investors holding off on committing to longer-term projects,” he said.

Mark Robinson, group chief executive of leading public-sector procurement authority SCAPE, said: “A return to growth will come as a surprise to many across the industry, with the general consensus that inflation – which shows no sign of easing – is curbing longer-term development plans.

“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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