Monthly construction output barely grew in March, increasing by just 0.2 per cent, according to the latest Office for National Statistics (ONS) figures.
However, the slight growth still helped to deliver £15.6bn of output – the highest monthly monetary value since records began in January 2010, the statistics organisation announced on Friday (12 May).
A 0.7 per cent increase in new work in March was almost cancelled out by a 0.6 per cent drop in repair and maintenance activity.
And a similarly mixed picture emerged from breaking down the statistics by industry sector, with a 2.2 per cent monthly increase in the value of infrastructure work (£2.4bn) offset by a 1.4 per cent fall in private housing activity (still the largest sector, at £3.2bn).
Kelly Boorman, partner and national head of construction at audit, tax and consulting-service provider RSM UK, said the slow growth in March would be “exacerbated by yesterday’s [11 May] decision by the Bank of England to raise interest rates for the 12th consecutive month”.
The bank increased its base rate to 4.5 per cent. Coupled with the ongoing slowdown in the private housing sector since the end of 2022, this “suggests that headwinds remain”, Boorman added.
On a quarterly basis, the ONS reported that construction output grew by 0.7 per cent from January to March compared with October to December 2022.
The increase “came solely from a rise in repair and maintenance (4.9 per cent), as new work saw a decrease of 1.9 per cent”, the ONS stated.
New orders in the first quarter of this year dropped by 12.4 per cent to £1.57bn compared with the final three months of 2022. This was due mainly to lower demand from the private commercial and private housing sectors, which fell by 22.3 per cent and 18.4 per cent respectively.
The ONS added that the annual rate of construction-output price growth was 8.5 per cent in the 12 months to March 2023, marking a slowdown in inflation that peaked at 10.4 per cent in May-June last year. And Purchasing Managers’ Index data for April, released last week, showed a third consecutive monthly increase in construction activity.
However, industry insiders remain watchful. “Cost pressures and material shortages seem to be stabilising, but it’s too early to say whether this represents a longer-term recovery, especially given the ups and downs of the last three years,” warned Clive Docwra, managing director of property and construction consultancy McBains.
He added: “This is reflected by the first-quarter figures of 2023 showing total orders decreased by more than 12 per cent compared with the final quarter of 2022.”
Today’s figures issued by the Australian Bureau of Statistics show the value of construction work done in Australia during the first quarter of 2020 reaching a record high, despite only marginal growth in the month of March.
Overall, the value of construction work grew by 1.1% in the March quarter, to reach a record high of $51.6 billion. Despite this overall increase for the quarter, growth slowed in March itself, with total construction work done rising by just 0.3%, compared to an increase of 1.3% in February.
The most notable growth in construction was in the housing sector, with a 4.2% increase in the value of total residential construction work over the quarter. This growth was driven by a 6.5% increase in new housing construction, which rose to its highest level since the December quarter of 2018.
The strong growth in the housing sector was offset by a fall in other types of construction work, with alterations and additions to existing dwellings falling 3%, non-residential building work falling 1.5% and engineering construction falling 0.3%, compared to the December quarter.
In seasonally adjusted terms, activity rose in four states and territories, with significant rises in New South Wales (2.6%), the Australian Capital Territory (3.0%) and South Australia (3.2%), and a mild 0.2% increase in Tasmania. This was partially offset by a 1.7% fall in Western Australia.
Commenting on the figures, Treasurer Josh Frydenberg said “Today’s construction figures show that the Australian construction sector is continuing to go from strength to strength despite the challenges posed by the COVID-19 pandemic. The Government is committed to supporting the sector and helping Australians get back to work”.
These figures show that, despite the ongoing challenges posed by the pandemic, the construction sector remains resilient, with record levels of work being done in Australia. This reflects the positive impact of government stimulus measures to date, and demonstrates that with continued support, the sector will continue to support the economy in these uncertain times.