January construction news update: New work creates the largest monthly construction growth since March 2021
Neon Mavromatis, Managing Director Construction, Kerry London provides a summary of the latest data from the Office of National Statistics (ONS) regarding monthly construction growth.
The latest ONS data* shows that construction output increased by 3.5% in volume during November 2021, which is the largest monthly rise seen in construction output growth since March 2021. This increase came solely from the growth in new work (5.7%), with repair and maintenance slightly declining by 0.2% this month. Anecdotal evidence from the survey suggests that the overall increase was due to a strong demand for work, product supply chain improvements and the unseasonably mild, dry weather.
Pre-pandemic recovery levels or post-pandemic evolution?
There’s no doubt that these numbers are good news for the construction market in general. This strong November growth is 1.3% (£197 million) above the February 2020 pre-coronavirus (COVID-19) pandemic levels. However, a closer look at this post-pandemic growth data also shows the resilience of the construction market and its ability to evolve in a crisis, because repair and maintenance work accounted for a larger proportion of this pre-pandemic growth figure than new work. Repair and maintenance work was 6.9% (£345 million) above the February 2020 levels, and new construction work was 1.6% (£148 million) below the February 2020 levels.
Mavromatis comments, “These are encouraging signs for the construction market. Alongside this monthly growth, construction output grew by 1.6% in the three months leading up to November 2021 - the first period of three consecutive monthly increases since July 2021.”
Mixed fortunes for different construction sectors
Since business started to decline at the start of the pandemic, there has been a mixed recovery at sector level, where infrastructure has continued to be the only new work sector where monthly output grew 49.3% (£923 million) above February 2020 level. Private commercial stood at 28% (£698 million) below pre-pandemic levels.
If we look exclusively at sector growth over the last month, there’s been a 3.5% rise in construction output during November 2021 or a rise of £496 million, compared with October 2021. Promisingly, eight out of the nine different construction sectors grew during the same period. New infrastructure and private housing work were the largest contributors to the monthly rise in November 2021, increasing by 11.4% (£286 million) and 5.5% (£160 million) respectively. Anecdotal ONS evidence suggests that renewable energy, road and rail developments were the biggest contributors to this large increase over the last 18 months.
Private housing repair and maintenance was the only sector to have fallen in November 2021, decreasing by 2.4% (£49 million).
Supply chain improvements
A quarter (26%) of construction businesses reported they had to change suppliers or were unable to source materials, goods or services needed from within the UK, this percentage is a notable drop from 35%, in late October.
Our team is available to assist you with any construction insurance-related issues or questions.
Simply call us on: 020 7623 4957 or email [email protected]
Kerry London is authorised and regulated by the Financial Conduct Authority. The company is a leading UK independent and Lloyd’s accredited broker which means that we work with a wide range of niche and major insurers.
This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such or regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note we have relied on information sourced from third parties and we make no claims as to the completeness or accuracy of the information contained herein. You should not act upon information in this bulletin nor determine not to act, without first seeking specific legal and/or specialist advice. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to fullest extent permitted by law.