Tide turns for two-month construction output growth

Construction output is estimated to have decreased in volume in July, ending two-month steady increase, latest Office for National Statistics (ONS) data shows.

According to ONS, monthly construction output fell 0.4 per cent in volume terms in July 2024 following a 0.5 per cent increase in June.

Falls in new work (0.2 per cent) and repair and maintenance (0.7 per cent) represented the largest  decrease in monthly output. 

Monthly output fell in five of the nine sectors in July: 

• private commercial new work – 2.4 per cent
•  private housing repair and maintenance – 2.7 per cent 

However, construction output has grown by 1.2 per cent in the three months to July as a result of increases in both new work 1.6 per cent, and repair and maintenance 0.8 per cent.

These increases were due to increases in May (1.7 per cent) and June (0.5 per cent).

Clive Docwra, managing director of property and construction consultancy McBains, said: “After May and June’s figures showed an increase in output, the construction industry was expecting better news for July.

 “Despite a modest overall decrease in growth, the industry will flag a dip in growth in five of the nine work sectors as a concern, particularly the 2.4 per cent drop in private commercial new orders.

“Although the figures may not show a post-election bounce, the optimism created by the new government’s announcements on housebuilding means the industry is feeling optimistic for the medium term, borne out by today’s figures showing output grew 1.2 per cent in the three months to July.

“Some early signs of intent from the government on how issues such as confirmation of how nationals planning frameworks can be streamlined, and measures to boost growth in the Budget, will further bolster confidence.”

Terry Woodley, managing director of Development Finance at Shawbrook, commented: “The construction sector continues to face challenges, with the latest figures showing a further decline in activity for July. Despite the warmer weather, construction remained sluggish, with rising costs for materials and labour, compounded by the naturally slower summer holiday period.

“However, there are signs of recovery in certain areas, particularly in new work and infrastructure, which helped mitigate a more significant drop in overall activity.

“As we approach the Autumn Budget, property developers will undoubtedly be closely watching for any new developments. The Government’s recent plans to increase house building targets and relax planning restrictions have been welcomed, contributing to a more optimistic long-term outlook for the sector.”

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