New work boosts construction output in Q3

Construction output has increased by 0.8 per cent in volume in Q3, due to increases in new work despite a fall in repair and maintenance, latest Office for National Statistics (ONS) data shows.

According to ONS, monthly construction output grew 0.1 per cent in volume terms in September 2024 following a 0.6 per cent increase in August.

In July, monthly construction output fell 0.4 per cent, despite a two-month period of sustained growth, with some speculating rising costs for materials and labour, compounded by the naturally slower summer holiday period, dealt a blow to activity.

This monthly increase came solely from a rise in repair and maintenance (0.4 per cent) as new work fell by 0.2 per cent.

However, in Q3 new work increased by 2.0 per cent, as repair and maintenance fell by 0.6 per cent.

And the annual rate of construction output price grew 2.0 per cent in the 12 months to September 2024.

The 0.8 per cent growth in output in Q3 (July–September) represents £444 million, due to growth over August and September.

Of the nine sectors, eight saw increases in Quarter 3 2024, with the largest contributors being;

• non-housing repair and maintenance – 2.6 per cent (£298 million) 
• infrastructure new work – 2.8 per cent (£213 million)

The only negative contributor was private housing repair and maintenance, which fell by 5.8 per cent (£539 million).

The annual rate of construction output price growth was 2.0 per cent in the 12 months to September 2024.

Meanwhile, total construction new orders fell 22.0 per cent (£2.7 billion) in Q3 compared with Q2.

This quarterly decrease was due mainly to private new housing and private commercial new work, which fell 31.3 per cent (£861 million) and 20.8 per cent (£786 million), respectively.

Josh Ward-Jones, director of Bloom Building Consultancy, said: “After a weak first half of the year, construction has surged to become the fastest growing industry in Britain’s slowing economy.

“But construction’s bragging rights come with caveats. 

“The expansion posted in the third quarter came after three successive quarterly falls, so while the turnaround is welcome, total output is still down on where it was at this point in 2023.

“There’s also a two-speed feel to the industry data, with private sector housebuilding stuck in reverse as high interest rates continue to hold back developers’ willingness to buy land and build homes.

“The picture is even more alarming when you look at the pipeline.

“Such a sharp slowdown in developer demand for residential construction underscores the huge task the Chancellor faces in her quest to re-energise housebuilding.

“Labour has promised to ‘get Britain building again’; the sector now awaits with interest the planning reforms and release of green belt land the Government says will kickstart housebuilding in areas where people want to live.

“Things are more positive in commercial real estate. 

“On the front line we’re seeing strong demand from commercial property landlords keen to invest in repair and refurbishment to generate extra value from existing buildings. 

“Infrastructure and civil engineering builders are licking their lips at the prospect of the huge projects announced in last month’s Budget, but for many housebuilders the elephant in the room remains the high cost of borrowing and all eyes will be trained on the Bank of England to see if it will reduce interest rates further to help boost Britain’s flagging economy.”

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