Private housing construction output grows 8.4%

July 12, 2018 / Isla MacFarlane
Private housing construction output grows 8.4%

ONS figures published today show that construction output increased 2.9% month-on-month in May. This was the fastest monthly growth rate in two years, reflecting an uptick in activity following adverse weather conditions during the first quarter.

Following consecutive periods of month-on-month growth in the final two months of 2017, construction output reached a record high. Construction output peaked in December 2017, reaching a level that was 31.5% higher than the lowest point of the last five years, May 2013. Despite a weak start to 2018, construction output has begun to show signs of recovery and, following the growth in May 2018, construction remains 30.3% above the level seen in May 2013.

Compared to a year earlier, output rose 1.6%, but contracted by 1.7% on a rolling three-month basis. This fall captures the £247 million drop in construction work in March during the Beast from the East, however.

This month-on-year increase occurred as a result of a 1.6% increase in both repair and maintenance, and all new work. The increase in all new work stemmed from the continued increase in the value of private housing new work, which increased by 8.4% compared with May 2017.

Rebecca Larkin, Senior Economist at the Construction Products Association, said, “The construction industry appears to have caught up with some of the work lost in February and March due to the freezing ground conditions and snow disruption. Month-on-month gains were evident across all sectors, but were strongest in private housing repairs, maintenance and improvement (RM&I), the third largest construction sector, due to warmer weather and longer days.”

The month-on-month growth in construction output was in part driven by the recovery of private housing repair and maintenance work, which grew 7.3% in May 2018 following a weak start to the year.

“Private housing new build was 8.4% higher than a year earlier, which points to strength in activity beyond basic catch-up as the industry enters the busier Spring and Summer selling season. However, for the year to date overall construction output remains 0.3% lower than a year earlier, with particular weakness in public non-housing (mainly education and health) and commercial, where a significant fall in new orders signals smaller pipelines of work.”

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