The fall in construction activity of 1.4% in June, according to the Office of National Statistics latest figures, is a growing concern for small builders given the wider fall of 6.1% for private new housing and the continuing fall of 0.2% for repair, maintenance and improvement (RMI) work.
Brian Berry Chief Executive of the Federation of Master Builders (FMB) said that with costs up across the board for both builders and consumers alike, it is affecting business confidence.
Ninety-eight per cent of FMB members are experiencing material cost increases, with builders inevitably having to pass on these costs to consumers.
The ONS figures show monthly construction output decreased 1.4% in volume terms in June 2022, following an upwardly revised 1.8% increase in May 2022, with both months affected by the timing of the Jubilee bank holiday; this is the first decrease since October 2021 (0.9%) following seven consecutive months of growth.
The decrease in monthly construction output in June 2022 came from falls in both new work (2.0%), and repair and maintenance (0.2%).
At the sector level, the main contributors to the decrease in June 2022 were private new housing and private commercial new work, which decreased 6.1% and 4.5%, respectively.
The level of construction output in June 2022 was 2.9% (£414 million) above the February 2020 pre-coronavirus pandemic level; repair and maintenance work was 12.6% (£626 million) above the February 2020 level while new work was 2.2% (£212 million) below its February 2020 level.
Despite the monthly decrease, construction output increased 2.3% in Quarter 2 (Apr to June) 2022, with increases seen in both new work and repair and maintenance (3.3% and 0.8%, respectively).
Total construction new orders decreased 10.4% (£1,355 million) in Quarter 2 2022 compared with Quarter 1 (Jan to Mar) 2022; this is the largest quarterly fall in construction new orders since Quarter 4 (Oct to Dec) 2020 (11.7%).
The annual rate of construction output price growth was 9.6% in the 12 months to June 2022; this was the strongest annual rate of price growth since records began in 2014.
“The result is that householders are starting to hold back with many households increasingly concerned about rising energy prices and the threat of a recession later in the year,” Berry said.
“With the Government at a standstill, we won’t see any ambitious announcements to help support the sector until September with the new Prime Minister will be announced. In the meantime, the Conservative leadership candidates need to be explaining what they intend to do help the construction sector boost economic growth.
“Cutting the rate of VAT from 20% to 5% or below on all repair, maintenance, and improvement work would be a welcome start to help boost building work all across the country and help people insulate their homes ahead of further rising energy bills.”
