Housing Slump Sees Construction Output Fall

Construction buyers reported a drop in overall output in June for the first time in five months.

The bellwether S&P Global/CIPS UK Construction Purchasing Managers’ Index recorded 48.9 in June, down from 51.6 in May and below the neutral 50.0 threshold for the first time in five months.

The index was dragged down by a steep decline in residential work.

Housing work (index at 39.6) decreased at the steepest pace since May 2020. Aside from the lockdown-related fall in house building, the rate of contraction was the fastest since April 2009.

Cost of Materials Continue To Rise

Monthly statistics from the Department for Business and Trade, show that the material price index for all construction work was 1.5% higher in May 2023 than May last year.

The material price index for all work increased by 1.1% in May 2023 compared to April 2023. This followed an increased of 0.8% in April 2023 compared to March 2023.

Looking at month-on-month changes, the ‘repair & maintenance’ price index had the greatest increase at 1.5%

Councils’ Construction Spend Set To Increase

Local authority spending on new construction, conversion and renovation is forecast to be £17.7bn in real terms in 2023/24, according to new figures published by the department for Levelling up, Housing and Communities (DLUHC).

This forecast highlights that new construction, conversion and renovation will remain the largest type of capital expenditure.

It is estimated that the overall increase of new construction, conversion and renovation work will add an additional £456 million to total expenditure on fixed assets in 2023/24.

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