ONS: Construction output fell 2% in April 2021

Construction output fell by 2.0% in April 2021, according to the latest Office for National Statistics (ONS) construction output data.

This follows a particularly strong increase in March (5.8%), and output now stands slightly above its pre-pandemic February 2020 level.

Monthly construction fell by 2.0% in April 2021 because of declines in both new work (2.9%) and repair and maintenance (0.6%).

The level of construction output in April 2021 was 0.3% above the February 2020 pre-pandemic level, despite the monthly fall.

Meanwhile, new work was 3.4% below the February 2020 level, repair and maintenance work remains 7.1% above the February 2020 level.

In contrast to the monthly fall, construction output grew by 5.1% in the three months to April 2021 compared with the previous three-month period.

This was because of a 5.2% increase in new work and 4.9% increase in repair and maintenance.

The increase in new work (5.2%) in the three months to April 2021 was because of growth in all new work sectors apart from private industrial, which fell by 3.6%.

The largest contributor to this growth was private commercial new work, which grew by 7.4%.

The increase in repair and maintenance (4.9%) in the three months to April 2021 was because of growth in non-housing and private housing repair and maintenance, which grew by 6.2% and 6.6% respectively.

Fraser Johns, director at Beard Financial, said: “The fact that output dropped by 2% in April is likely to be more of a reflection of the very strong growth we saw in March.

“The three months to April showing more than 5% growth overall, gives some context to that April fall.

“We’re still above pre-pandemic levels of output and during Q1 we saw a 5.1% increase in new work, according to today’s stats, which really points the way for how May and June have been unfolding.

“The sector is recovering at pace as we saw with the latest UK Construction PMI figures putting new business and orders at their highest level since 1997.

“But that is also putting huge demand on supply chains which are struggling with the current global shortage of materials.

“There is also huge demand for labour with the CITB’s Construction Skills Network this week saying an extra 217,000 workers are needed by 2025 to keep up with demand.

“Now more than ever it is crucial that the industry takes a collaborative approach in our relationships with suppliers and sub-contractors, in order to plan and mitigate for issues further down the line.

“Otherwise there is the real potential for a perfect storm to blow up and threaten to undermine the growth in the sector this year.”

Gareth Belsham, director of Naismiths, added: “Growth stumbled in April but in an industry already at a full sprint, few will be concerned.

“Even with April’s surprise decline in output, overall construction activity is still higher than its pre-pandemic level and sentiment remains very strong – with many builders’ order books looking healthier than they have done in years.

“Nevertheless April’s fall will have served as a reality check. Private sector housebuilding, which has roared back since the start of the year, saw output dip by 11% compared to March.

“Fortunately infrastructure work moved by the same amount in the opposite direction, but such volatility reveals the mixed fortunes within an industry grappling with severe supply side issues.

“Average wages are rising as employers fight to lure workers, and material costs are surging as demand far exceeds supply.

“The difficulty of getting hold of key materials like steel and timber risks knocking existing projects off course and is pushing up tender prices for future work.

“But frustrating though these issues are, they are growing pains for an industry well versed in handling boom and bust.

“The phenomenal rate of growth seen in the early months of 2021 was always going to be hard to maintain, and overall things are settling into a better rhythm.

“While April’s month-on-month fall is disappointing, the 5.1% quarterly rate of expansion is a huge achievement and the industry’s recovery from a punishing 2020 remains broadly on track.”