UK construction output rebounds after a difficult start to 2018

The latest figures show that construction output grew by 0.9% in the second quarter of 2018 after a 0.8% fall in the first quarter of the year.

Data published by the Office for National Statistics (ONS) shows a quarter-on-quarter increase in construction was ignited by a 2.7% increase in repair and maintenance work with no change in overall work seen. 

The ONS data reveals that construction output has returned to levels seen at the end of last year and is 30.2% above the lowest point in the last five years - in July 2013. The economic boost in the sector has been helped by the warmer weather according to researchers and follows four straight months of contraction in the month-on-month series at the start of 2018.

Construction output increased by 1.4% between May and June after an increase of 2.9% between April and May. The June 2018 month-on-month output rise was attributed to continued growth in new infrastructure work, which increased by 9.2%.

The head of national accounts at the ONS, Rob Kent-Smith, said: "The economy picked up a little in the second quarter, with both retail sales and construction helped by the good weather and rebounding from the effects of the snow earlier in the year.

Despite the recovery showed by the statistics, Scape Group’s chief executive Mark Robinson shared his “cautious optimism” and highlighted the disappointing levels of construction in the health and education sectors with both only accounting for 5.3% of total construction work.

“Despite these encouraging signs it is concerning to see that publicly funded construction projects in the health and education sector are falling, and in June accounted for only 5.3% of total construction work,” he added. “Our own research shows that there is significant demand for new school places, with 14,522 new secondary school classrooms required by academic year 2020/21. Innovative approaches to delivering the facilities we need is vital, and the sector needs to continue exploring the benefits of modular construction. Whilst the figures suggest the sector is returning to the more positive outlook we experienced at the end of 2017, there is anecdotal commentary that the recent good weather has benefitted output. This year has clearly demonstrated how susceptible the sector is to the seasons and we must prepare ourselves with a steady stream of new work as we head into the coming months.”

Rebecca Larkin, senior economist at the Construction Products Association, said warmer weather in May and June improved ground conditions for sites and helped the industry recover from a troubled start to the year.

She added: “As much as it has been a tale of two quarters, there has also been a divergence by type of work. New build activity was unchanged from Q1 and was 0.4% lower than 2017 Q4, as rises in public housing, infrastructure and industrial output were offset by falls in private housing and public sector work. However, all repair and maintenance (R&M) activity rose 2.7% to a record high of £14.2 billion and is now 0.8% higher than at the end of 2017.”