Construction output stutters as material shortages increase

The construction sector expanded by 6.3% in the three months to May 2021, however, the sector contracted for a second consecutive month in May 2021, by 0.8%, but remains 0.3% above its pre-pandemic level in February 2020. 

The construction sector had expanded by 6.3% in the three months to May 2021 because of increases in new work, and repair and maintenance of 6.6% and 5.8% respectively. The fall in construction output in May 2021 was driven by both a fall in repair and maintenance (1.6%) and a fall in new work (0.3%).

The increase in new work (6.6%) in the three months to May 2021 was because of growth in all new work sectors. The largest contributions to growth were private new housing, and infrastructure, which grew by 7.4% and 9.7% respectively.

The increase in repair and maintenance (5.8%) in the three months to May 2021 was because of growth in non-housing, and private housing repair and maintenance, which grew by 9.0% and 4.7% respectively, and offset the 3.1% fall in public housing repair and maintenance.

Construction leaders are warning that continued recovery in construction activity risks being undermined by price increases and a shortage of building materials.

Brian Berry, Chief Executive of the FMB said: “The building materials shortage is disproportionately affecting small builders and threatening their recovery from the pandemic despite strong growth in the construction sector. The materials shortage is proving a serious detriment to both businesses throughout the supply chain and consumers. As the country reopens for business, it’s imperative that building firms have better access to the materials they need to build.”

Berry concluded: “It’s very encouraging that activity in the construction sector is increasing at its fastest rate in over twenty years, but given that confidence is rapidly dropping away, the lack of materials needs addressing before jobs and business continuity start to be compromised. Small firms form over 90% of the construction industry, and they are experiencing the most difficulties as a result of these shortages.”

UK gross domestic product (GDP) is estimated to have grown by 0.8% in May 2021, the fourth consecutive month of growth, but remains 3.1% below the pre-coronavirus (COVID-19) pandemic levels seen in February 2020.