Annual construction figures show largest growth since 1997

Neon Mavromatis, Managing Director Construction, Kerry London provides a summary of the latest data from the Office of National Statistics (ONS) regarding monthly construction growth.

The largest construction growth since 1997

The latest ONS data shows that total construction growth increased 12.7% in 2021 compared with 2020. This is the largest increase since annual records began in 1997, exceeding the previous record of 9.9% in 2014.  This impressive growth follows a record fall of 14.9% in 2020, which was to be expected because of the impact of the pandemic.  The annual increase in 2021 was due to increases in both new work, and repair and maintenance, which rose 11.2% and 15.5% respectively.

At a sector level, eight of the nine sectors saw an increase in annual growth in 2021.  Record annual growth increases were seen in:

• infrastructure (30.4%)
• private housing repair and maintenance (20.2%)
• non-housing repair and maintenance (14.1%)

Anecdotal evidence suggests the large increase seen in infrastructure new work in 2021, is from projects such as High Speed 2, motorway improvements and green energy developments.

December increases for the second month in a row

The latest ONS data shows that shows that monthly construction output grew 2.0% in volume terms in December 2021 compared with November 2021. This is the second consecutive month of growth and the largest single-month growth since March 2021 (3.9%).

Information from received for the Monthly Business Survey for Construction and Allied Trades and the Business Insights and Conditions Survey (BICS) suggested some of the issues in sourcing construction products in the second half of 2021 had continued to ease.

Mavromatis comments “The construction market has learned a lot from the disruption brought about by the pandemic and these new figures reflect that.  Growing demand over the past year has given firms the confidence to be to feel buoyant about 2022.”

Infrastructure and new housing – the big hitters

This 2% (£281 million) growth was largely due to new infrastructure and private new housing projects, both contributing the largest monthly increases of 8.5% (£212 million) and 3.1% (£95 million) respectively. Significant increases were also seen in the smaller sectors of private industrial and public new housing, which grew by 9.1% (£41 million) and 7.4% (£30 million) respectively.

All sectors in repair and maintenance saw small decreases during December.

Survey evidence suggests that the increase in private new housing is because of businesses pushed through more work through than a usual December before the end of the year. Improvements in the supply chain and the increased availability of construction products during December 2021 (compared with previous months) is also likely to have increased overall productivity amongst house builders.

The survey also suggests that the increase in private industrial work came from a rise in warehouses and distribution centres, with warehouses in private industrial seeing annual growth of 144.6% in 2021.  It’s believed that this is probably linked to the growth in online shopping habits driven by the COVID-19 pandemic and lockdowns.

Q4 growth reverses the Autumn decline

Construction output increased 1.0% (£421 million) in Quarter 4 (Oct to Dec) 2021 reversing the 1.4% fall in Quarter 3 (Sept to July) 2021.

Both new work 1.1% (£287 million) and repair and maintenance 0.8% (£133 million) saw increases in Quarter 4, 2021.  Overall, eight of the nine construction sectors saw an increase in Quarter 4 2021. The largest contributors were:

• public other 8.7% (£110 million)
• private industrial 4.9% (£112 million)
• private commercial new work 2.1% (£108 million)

Private commercial declines due to economic uncertainty

Private commercial was the only type of work to see an annual decline in 2021 (6.8%). This fall is on the back of a record decline in 2020 (22.2%) and is the fourth successive decline in annual growth for private commercial new work.  Indications show that some businesses might be delaying investment decisions over the last few years because of economic uncertainty.

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