Construction output falls due to shortages and price rises
A SHORTAGE of materials has caused output in the construction trade to fall below pre-pandemic levels, latest figures show.
The sector is being held back by lack of certain products, resulting in problems with price rises, the Office for National Statistics (ONS) said.
Output – the amount of work done – dropped 1.6 per cent in July to below the level in February last year, it confirmed.
The fall was mostly caused by a slowdown among house builders.
The ONS cited rising prices for raw materials such as steel, concrete, timber and glass for the drop.
Many firms reported that while order books were healthy, the availability of certain construction products was impacting on projects currently under way.
Gareth Belsham, director of the national property consultancy and surveyor Naismiths, said: “It’s getting increasingly hard to dismiss construction’s supply woes as mere teething problems. Soaring prices for key materials like steel, timber and fuel aren’t just eating into builders’ margins. Widespread shortages and long delays are creating a creeping sense of uncertainty that is prompting some developers to contemplate pausing their developments until things calm down.”
Alongside July’s fall, construction output dropped by 0.6 per cent in the three months beforehand, the ONS confirmed.
It follows a report this week showing prices paid by construction firms for materials rose last month at the second fastest rate in more than 20 years.
Data from number crunchers IHS Markit and the Chartered Institute of Procurement and Supply revealed “accelerated input prices”.
Timber prices have doubled in the past six months alone and cement is up by around 30 per cent.
Firms paying more for supplies are usually passing the costs on to customers.
The figures come three months after the proportion of construction firms reporting higher than normal cost increases hit a new high of 44 per cent, according to the ONS.