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Latest ONS data shows construction output is 1.5% below Feb 2020 level

by Jennie Ward

“The road to recovery will be a difficult one until the industry can solve the shortages issue” – sector comments on latest output data.

The latest data from ONS shows that monthly construction output fell 0.2% in volume terms in August 2021 with the level of output now said to be 1.5% below its pre-coronavirus pandemic level in Feb 2020.

Commenting on the figures, Fraser Johns, Finance Director at Beard, said: “With the reduction in output in August marking the first quarterly decline since July 2020, this is clearly not just a minor blip, and marks a real challenge for the construction industry to overcome.  

“A lot has been made of the supply chain issues and subsequent price rises and rightly so. Client confidence has certainly been impacted, with inflationary price pressures and supply shortages at the root of hesitancy to green light projects in the current environment.  

“After the sharp recovery in the past year, the industry needs to pull together to ensure this doesn’t become a long-term decline. To overcome it, contractors must be proactive, and regular collaboration with suppliers is fundamental to all projects.

“Multi-step procurement processes may become the norm, and this should help absorb the extended lead-in times for certain materials, and mitigate the risk of disruption to projects on the ground.

“Even with these precautions in place, it looks like the road to recovery will be a difficult one until the industry can solve the shortages issue.”

Clive Docwra, Managing Director of property and construction consultancy McBains, points to a “triple whammy” of issues that have contributed to and need to be addressed if the sector is to get out of this “downward spiral”. He explained: “Today’s figures are proof that the construction sector is in a downward spiral, as this is the fifth successive monthly fall in output.

“New work remains flat in due in large part to a continuing shortage of essential products such as steel, concrete and timber.  Steel prices in particular are now almost 75% higher than they were in August 2020.

“The outlook over the remainder of the year looks ominous too.  The triple whammy of continuing supply chain issues, together with a lack of HGV drivers to deliver the materials that are available, means some developments being delayed, and the fuel and energy crisis is also likely to add to project costs.

“Skills shortages are also a concern, so the government should grant an exemption allowing skilled foreign construction workers to apply for work visas, as they did to address the shortage of HGV drivers.”

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