Output rises but Ukraine conflict clouds optimism

Construction output rose 1.4% in January month-on-month, hitting its highest level since September 2019 as supply chain difficulties eased, official figures published today show.

But warnings have been made the war in Ukraine will put the brakes on growth with many firms set to feel a cash squeeze.

Scape chief executive Mark Robinson said: “The sector’s resolve is likely to be tested further by the effects of the war in Ukraine on energy prices and the supply chain. Persistent challenges around timber and steel will only intensify.

“The inflationary pressures created here in the UK will be difficult to manage, particularly for SMEs that may be tied into fixed-prices contracts.”

British Steel has already slapped a £250 per tonne hike on steel sections, blaming the conflict in the east for the hike adding that the rise was to meet escalating energy prices.

The Office for National Statistics figures show overall output across the industry in January totalled £14.7bn, making it the third consecutive monthly rise of 1% or more.

The ONS monthly increase was boosted by a 4.6% rise in repairs and maintenance output to £5.4bn. Private housing and non-housing output rose5% and 5.5% respectively. Public housing repairs and maintenance fell 0.6%. New work however fell 0.8%, with infrastructure dropping 4.7% and public non-housing work 9.1% month-on-month.

Total construction output also rose 3% in the three months to January 2022, the strongest growth in the three-monthly series since June 2021 (3.4%), with increases seen in both new work and repair and maintenance of 4% and 1.4%, respectively. ONS said this due in part to the easing of supply chain problems,

It said 3% of construction businesses were unable to source materials, goods or services needed from within the UK in January, compared to 11% in October.

Output is now 1.4% above the February 2020 pre-pandemic level but the ONS said the recovery is “mixed” with infrastructure output rising 37.9% but private commercial remaining 27.8% below their respective February 2020 levels.