The latest data from the ONS show a 1.2% growth in the construction sector for the last quarter, which helped UK GDP surpass forecasts.
The 1.2% increase comes after a smaller growth of 0.3% in the first quarter and was driven by improvements in both new work and repair and maintenance.
From April to June, new work increased by 1.1% while repair and maintenance grew by 1.4% on the previous quarter.
On a monthly basis, the figures show a modest construction growth of 0.3% in June after a dip of 0.5% in May. The growth was due to a 1.2% increase in repair and maintenance, while new work fell by 0.4%.
Private new housing increased by 1.5% in the quarter, but public new housing saw a significant fall of 4.4%. In terms of repair and maintenance, private housing was the largest positive contributor, increasing by 3.3%.
The ONS data highlighted that there may be a slowing down of construction activity ahead, with the sector predicting a tough Autumn Budget.
New orders fell by 8.3% (£976million) in Q2, although this was mostly due to weaker demand in infrastructure and private commercial work.
Neil Leitch, managing director of development finance at Hampshire Trust Bank, said: “A rise in new private housing is good to see, but output is still below where it was before the pandemic, so there is a long way to go. Approvals on paper do not build homes. Unless the firms that do the work are financially stable and have the people they need, those permissions will just sit there. That’s the real risk – approvals without delivery.”
“A lot of SME construction firms, and the subcontractors and suppliers they rely on, are under pressure. Begbies Traynor’s figures show more are in financial distress, and ONS data has construction as the slowest-growing sector of the economy in the first quarter. When delivery depends on businesses operating on fine margins, the sector is always one shock away from stalling.”
“We will not hit housing targets unless the whole delivery chain is strong enough to meet them. That means giving planning teams the resource to make timely decisions, backing SME construction businesses so they can commit to projects, and replacing the skills we are losing as the workforce ages. Without that capability on the ground, the ambition to build more homes will stay just that, an ambition.”
Source: Showhouse
