November construction output masks the real challenges faced by the industry in 2023, warns RSM
In November 2022, the volume of monthly construction output saw flat growth (0.0%) in volume, following a downwardly revised increase of 0.4% in October 2022. The flat growth came as a result of new works falling by 0.4%, offset by repair and maintenance work increasing by 0.6%.
The volume of construction output in November 2022 remains 3.1% (£452 million) above the February 2020 pre-coronavirus pandemic level, with repair and maintenance work 15.5% (£778 million) higher than in February 2020. However, with new work in November 2022 £327 million below the pre-coronavirus pandemic level, this paints a truer picture of the challenges the industry will be facing heading into Q1 2023.
Commenting on the construction output data Kelly Boorman, partner and national head of Construction at RSM UK, said: ‘The latest ONS figures show that as monthly construction output sees flat growth in volume in November 2022this masks the real challenges faced by the construction sector. A truer picture is that there has been a rise in administrations, with the brakes being put on some major infrastructure projects by central government. Although November is naturally a quieter month in the lead up to Christmas, adverse weather conditions have also played a part in the slowdown of work, bringing projects to a halt.’
She added: ‘2023 is set to be a challenging year for construction, as businesses struggle to manage cash flows and protect their supply chains. With administrations ramping up in Q1 2023, delays to project start dates and fragility in the supply chain are making things difficult for already squeezed margins. As such, businesses will be looking to the government to give infrastructure projects the green light, ensuring a pipeline of work and stimulating much needed market recovery.’