Construction output declined during the third quarter of 2021 as the continuing recovery slowed sharply during the summer as growth was hit by skills shortages, rising prices and supply chain shortages. The latest data from the the Office for National Statistics reported that national output expanded by 1.3% in the three months to September.
Construction output fell by 1.5% in Quarter 3 2021, after four consecutive quarterly increases. There was a fall across all sub-sectors of construction reflecting challenges faced by the construction industry from rising input prices and delays to the availability of construction products. The construction sector output fell in July and August but returned to positive growth during September.
Gareth Belsham, director of the national property consultancy and surveyors Naismiths, commented: “Construction’s lacklustre performance confirms that the chronic shortages of both building materials and people are proving to be serious obstacles to growth. With concrete, timber, glass and steel all in short supply, the ONS data reveals that in October, 10% of builders simply could not source the materials they needed. A quarter of contractors managed to get what they needed but were forced to change suppliers.
“Sentiment across the industry remains broadly upbeat, and while soaring inputs costs and supply chain problems are dogging projects of all sizes, the sector has weathered far worse than this in the past. After a stellar recovery from the pandemic’s initial impact, construction has fallen back to Earth with a bump and we expect growth to be more measured from here.”
Brian Berry, chief executive of the FMB said: “The 1.3% improvement in construction output in September is a positive turnaround from the fall in previous months. The 1.5% drop in overall output for Q3 2021, from Q2, signals the continued need for action to be taken to resolve building material and skills shortages. Through the FMB’s State of Trade Survey for Q3, we know that 89% of small, local builders have been forced to press pause on jobs as a result of material and labour shortages, with 97% having experienced increased material costs. The fact that we are now experiencing the strongest annual rate of construction output price growth since records began indicates the unhealthy effects of these two issues on the sector.”
UK gross domestic product (GDP) is estimated to have increased by 1.3% in Quarter 3 (Jul to Sept) 2021 following the continued easing of coronavirus (COVID-19) restrictions.
The level of quarterly GDP is now 2.1% below where it was before the coronavirus pandemic at Quarter 4 (Oct to Dec) 2019.
In Q3 2021, household consumption made the largest contribution to expenditure; there was a fall in underlying stock levels, likely reflecting some of the recent supply chain challenges, and a negative contribution from net trade.