Monthly construction output increased by 0.4% in volume terms in August 2022, which is the second consecutive monthly growth following the upwardly revised increase to 0.1% in July 2022

Commenting on last weeks ONS Construction Output for August, Stuart Law, CEO of the Assetz Group, said:

“This month’s data reveals an increase in monthly construction output, rising for the second time consecutively. The data suggests that the heatwave in July inhibited construction growth, but as the high temperatures cooled towards the end of August, activity started to increase again. However, looking forward as we move out of summer, we cannot ignore broader socio-economic and political ongoings that are likely to have a significant impact over the winter months. The construction sector is among the industries that will be the hardest hit by the challenging economic environment.

“This is particularly significant for SMEs who are disproportionately impacted by exponential increases in the cost of materials, labour shortages, rising energy bills, supply chain issues and the looming threat of at least a modest recession driven by sharply rising interest rates. This instability is also aggravated by uncertainty in economic policy that has often failed to prioritise small and medium sized businesses. As a result, we do expect construction to slow materially into 2023 as this combination of further factors comes to bear on the market.

“While we have seen the UK construction industry welcome the new Energy Bill Relief Scheme from 1 October, the pressure will be on the Government to uphold long-term support for the sector in the face of steadily rising energy bills.

“Whilst macro-economic conditions can’t be easily solved, a key solution to this is supporting SMEs through innovative funding solutions so they can properly play their part in boosting construction, and most importantly, meeting the urgent need for new homes as we face a housing crisis in the UK. SMEs are agile and favourable when it comes to sustainable growth in the construction sector and through revitalising the SME sector, we can support companies that are pioneering innovative construction methods.

“Intervention couldn’t be more needed, particularly as high street banks are visibly pulling back funding due to decreasing risk appetite. Private investors already play a huge part in stimulating and mobilising the SME sector, but we need to consider the future of construction carefully and private investment needs to play a bigger part of supporting the sector going forward.”