Construction companies have reported that problems with the supply chain are easing, the weather was conducive to building work and demand for new homes is driving new business.
Monthly construction output increased 3.5% in volume terms in November 2021 compared with October 2021, to £14,676 million, according to the latest ONS data. This is the highest level of construction output since September 2019.
Fraser Johns, finance director at Beard said: “The growth in output in November is certainly encouraging that the construction sector is moving in the right direction. A major positive is that in the three months prior to November, output in the sector increased and a stable sustained period of growth is key for the industry.
“As ever, client confidence plays an important role, and demand for new work was the driving force as construction recorded a positive month.
“To ensure this confidence doesn’t dip, collaborating with suppliers and clients is essential. To build these crucial relationships, Beard has implemented weekly discussions with key partners in the supply chain. These sessions allow open two-way dialogue, so if there are any issues on the horizon, a solution can be found.
“Close collaboration with suppliers has been, and will continue to be absolutely critical in the coming months. When there are inevitably delays for some materials, by working together creative solutions can be found that ensures projects are kept on track.”
Anecdotal evidence received from businesses responding to the Monthly Business Survey for Construction and Allied Trades (MBS) and the Business Insights and Conditions Survey (BICS) suggested that supply chain issues experienced over recent months had eased somewhat as businesses were able to obtain materials to complete and start projects.
Alongside this, the unseasonal dry and mild weather (PDF, 105KB) seen in November 2021 ensured that construction sites did not lose many working days across the month.
It should also be noted that prices of construction materials continue to be high, however, the rate of growth has eased a little in comparison with previous months.
The 3.5% rise in construction output in November 2021 represents a rise of £496 million in monetary terms compared with October 2021, with eight out of the nine sectors seeing an increase.
Infrastructure new work and private housing new work were the largest contributors to the monthly rise in November 2021, increasing by 11.4% (£286 million) and 5.5% (£160 million) respectively. Infrastructure new work last saw stronger monthly growth in May 2020 (21.4%) with anecdotal evidence suggesting renewable energy projects along with road and rail developments are contributing significantly to the large increase in this type of work over the last 18 months.
In November 2021, 26% of construction businesses reported they had to change suppliers or were unable to source materials, goods or services needed from within the UK. While still higher than the proportion for all industries sampled in the BICS (17%), the percentage for construction businesses has seen a notable drop from 35%, in late October.
Construction businesses reporting no disruptions to intra-UK procurement increased by 5 percentage points in the latest survey wave. The improvements in the supply chain coupled with stronger demand, which is backed by an increase in new orders (specifically in the first half of 2021), are likely factors to explain the strong monthly growth in output in November 2021.
Construction output rose 1.6% (£671 million) in the three months to November 2021, this is the first three-monthly rise since July 2021. Similar increases in both new work, and repair and maintenance (1.5% and 1.6% respectively) contributed to the growth.
Infrastructure new work and private housing new work made the largest contributions to the three-monthly rise, increasing by 3.6% (£273 million) and 1.8% (£164 million) respectively.
Private commercial new work and public housing new work were the only two sectors to have seen falls in the three months to November 2021, decreasing by 3.2% (£176 million) and 7.5% (£94 million) respectively.
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