‘Tide beginning to turn’ as new work grows in March despite wet weather

Construction output grew a modest 0.2% in March, with an increase in new work largely offset by a decline repair and maintenance 

The latest figures from the ONS show a total of four out of nine sectors experienced growth, with infrastructure new work (0.33%) and other public new work (0.31%) the main drivers. 

Output in the first quarter (January to March) was 0.7% up on Q4 of 2022, stemming solely from a rise in repair and maintenance. 

Industry figures have responded positively to the release, with Fraser Johns, finance director at contractor Beard saying it showed the “tide beginning to turn” after a difficult 2022. 

“As we’ve headed further into the year, there’s no question the outlook has improved, helping to alleviate some of the bottlenecks and cost pressures found on site and encourage greater confidence among clients and firms,” he said.  

“It’s positive to see more clients committing to new projects once again and the likes of infrastructure new work and public other new work continuing to be key drivers.” 

The ONS’ monthly survey for construction and allied trades revealed anecdotal evidence of easing inflation and material costs, though customers are still reportedly hesitating to commission work due to fears about the economy. 

Clive Docwra, managing director of consultant McBains, said the month’s growth was “a measure of good news for the construction industry”, particularly considering the impact of the wettest March for more than 40 years. 

>> Output flatlines in February as new build growth offset by drop in repair and maintenance, says ONS

The private housing extended its slowdown, recording its fifth monthly fall in the last seven. 

New work output in private housing was down 0.28% in March, while public work in the sector was also down by a more modest 0.02%. 

“The picture in the housebuilding market in particular is not surprising,” said Docwra. 

“Although reports elsewhere show house prices are rising which would normally trigger an increase in construction activity, most developers are still planning to reduce by about a quarter the number of homes they planned, and further land purchase is also on hold until the economic forecast becomes clearer,” he added. 

Public housing (-0.17%) and non-housing (-0.36%) repair and maintenance also dropped, though private housing repair and maintenance was up 0.27%. 

Total new orders in construction declined 12.4% in the first quarter, compared with Q4 2022, which was mainly due to a fall in private commercial (-22.3%) and private housing (-18.4%) new orders.

Meanwhile, in a trading update for the first quarter Balfour Beatty said that trading was in line with expectations. Its order book at the end of March was £17bn, a fall of £400m from the end of December. Its average monthly net cash was £740m for the first three months of this year, compared to £804m for 2022.