Latest News Tue, Jan 14, 2020 12:55 PM
The Office for National Statistics (ONS) released the latest data on construction output for November 2019.
Official figures from the ONS show that construction output increased by 1.1% in the last three months to November 2019.
Monthly construction output increased by 1.9% - the highest monthly growth since January 2019. Since October, construction output has partially recovered from the 2.2% fall that was reported at the end of last year. Firms across the UK experienced adverse weather in October which slowed progress. We have therefore seen a pick-up in November’s output for the industry, which had to make up for delays in work from October.
Growth for November was predominately driven by new work (2.4%) as well as repair and maintenance (0.9%). Growth slowed for both public new housing (from 4.4% to 1.0%) and infrastructure work (from -6.0% to -0.4%), but this is still positive compared to the previous month.
In addition to the ONS figures, the Department for Business, Energy and Industrial Strategy (BEIS) and Glenigan published their construction figures for November. General consensus suggests that the construction industry’s output has slowed over the past year compared to November 2018.
BEIS reported a 9.3% decrease in brick deliveries and 8.9% decrease in concrete block deliveries in November 2019 compared to the previous year, seasonally adjusted. The material price index of “All Work” decreased by 0.6% in November 2019 compared to the same month the previous year as well.
On 7 January, Glenigan published their latest index of construction activity in the UK on the three months to December 2019. Compared to 2018, new project starts were 19% lower, residential starts were 27% down and non-residential projects were 12% lower. The snap election temporarily disrupted the flow and the value of work starting on site during the final quarter of 2019 which fell 15% against the previous quarter on a seasonally adjusted basis.
Caroline Gumble, Chief Executive at the CIOB, commented: “Comparing these latest figures to those in 2019, it is apparent that investment into new builds and refurbishment has slowed.
"We believe this is due to low business confidence leading to a reluctance to expand, reduction in infrastructure investment and less long-term planning commitments. This is yet more reason for government to heed calls to focus on a pipeline of well-planned projects and support for sector jobs across the UK.
"These should be among the priorities for the new government for this important sector.”
The Chancellor must use the upcoming Budget to slash the rate of VAT on repair and maintenance work and to invest in the construction sector in order to maintain the industry’s recovery, according to the Federation of Master Builders (FMB) in response to the ONS construction output data.
Brian Berry, Chief Executive of the FMB, said: “While 2019 was a year marked by political and economic uncertainty, there does seem to be some small signs of hope for the construction industry, with the largest monthly growth in the industry seen in November since the start of the year. It is too soon to tell whether this will be a longer term trend, as some sectors such as private house building and repair and maintenance continue to see sluggish growth.
“The upcoming Budget provides the perfect opportunity for the Government to help ensure this positive trend at the end of 2019 continues into the new decade. In order to help boost the industry, the Chancellor should prioritise cutting VAT on home improvement works, so that tax isn’t a barrier to homeowners upgrading the energy efficiency of their properties.
"The Government should also use the Budget as an opportunity invest in construction skills to help build the homes and infrastructure we need, and invest in planning departments to ensure the planning system doesn’t act as a blockage to the Government’s ambitious housing targets.”
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