Production in the construction sector is up, but the ONS still estimates a ‘mixed bag’

UK construction output is estimated to have increased by 0.8% in the third quarter (July to September) 2024 compared to the second quarter (April to June) 2024.

New figures from the Office for National Statistics (ONS) suggest the increase came solely from an increase in new works (2.0%), with repairs and maintenance falling by 0.6%.

Monthly construction output is estimated to have increased by 0.1% in volume terms in September 2024, driven solely by an increase in repair and maintenance work (0.4%), with new work decreasing by 0.2 %.

At the sector level, four of the nine sectors experienced growth in September 2024. The main contributor to the monthly increase was the repair and maintenance of private housing, which increased by 1.3%.

Total new orders in the construction sector fell by 22.0% (£2,722 million) in the third quarter of 2024 compared to the second quarter of 2024. This quarterly decline was mainly from new private housing and new commercial work private, which fell by 31.3% (£861 million) and 20.8% (£861 million). 786 m), respectively.

The annual growth rate of producer prices in construction was 2.0% over the 12 months through September 2024.

Scott Motley, head of program, project and cost management at AECOM, said: “The sector’s impressive form continues and businesses will be encouraged by the pipeline of new work available to help stem the traditional winter slowdown.

“If it wasn’t clear before, yesterday’s Mansion House speech shows that infrastructure investment is the cornerstone of the Government’s economic growth plans. The sector’s task will be to effectively seize these opportunities and help align private financing with public sector investments so that projects are quickly implemented.

“Health, transport and education remain the three priority areas of work, both in new construction and in renovations. Despite the outlook for rising labor costs, larger order books and a more secure pipeline of new work should help ease any concerns and put companies front and center on the horizon 2025.”

Clive Docwra, managing director of property and construction consultancy McBains, said: “Today’s figures are mixed for the industry. The good news is that construction outperformed the economy as a whole during the third quarter of the year, with output increasing by 0.8%, compared to 0.1% of overall GDP.

“In contrast, September figures for construction show a slowdown in growth of just 0.1% compared to August. Furthermore, following a recent mini-resurgence in housebuilding, figures show that new work in the private housing sector fell by 0.4% in September, while work in the private commercial sector fell by 0.1%.

“These declines could be the result of uncertainty surrounding the budget, with investors delaying their decisions until the situation becomes clearer. A December interest rate cut also appears unlikely due to fears that the borrowing spree outlined in the budget will stoke inflation, so costs are likely to remain high, knocking some major projects out of commission For now.

“However, our clients across many industries remain optimistic about the long term and hope that this represents just one blip in the recent recovery.”