Construction now only sector of UK economy still growing – “both a win and a worry” – surveyors Naismiths
Gareth Belsham, director of the national property consultancy and surveyors Naismiths, commented: “So far, so good. After February’s wobble, construction output snapped back into growth territory in March, to hit £15bn for the month – its highest ever level.
“But today’s data is both a win and a worry for what’s long been seen as the most volatile sector of the UK economy.
“After building up a huge head of steam last year, momentum is still strong – and the construction industry expanded by an impressive 3.8% in the first quarter of 2022.
“In March it had the honour of being the only major sector of the economy to be expanding, and total output is now comfortably above its pre-pandemic level.
“But such rapid growth in the face of widespread supply problems is extracting a high inflationary price. With the prices of building materials, labour and transport costs all soaring, the annual rate of output price inflation hit 7.3%in March, its highest level since records began.
“And despite all the heat in the market, the pipeline of new work is starting to slow. New orders fell by 2.6% in the first three months of the year compared to the final quarter of 2021.
“While this is disappointing, it’s far from a disaster. The final months of 2021 saw a huge 9.2% jump in new orders, so the current slowdown only looks bad compared to that.
“Most building firms remain extremely busy right now, and their order books for the coming months are reassuringly full.
“Nevertheless the war in Ukraine has disrupted the supply of key building materials including steel and timber, bringing the unwelcome return of shortages and triggering a new wave of cost inflation.
“Yet sentiment remains largely positive and the market is more free-flowing than it was. Having showed incredible resilience in the way it dealt with the pandemic and then the post-pandemic supply problems, construction is adapting well to this latest challenge.”
Full report: published by the ONS.