Economic digest

Clay Technology magazine
,
16 Aug 2018

The latest figures affecting construction and related industries in the UK. 

The latest release from the UK Office for National Statistics (ONS) shows that construction output fell by 1.7% in May 2018, continuing its decline in the three-month on three-month series. ONS attributes this predominantly to a 2.5% fall in new work in May.  

According to the Federation of Master Builders (FMB), rising costs, Brexit, and the Beast from the East (see Clay Technology, May 2018) can still be felt and are cited as responsible for the decline in construction output this year. 

In June, Brian Berry, Chief Executive of the FMB commented, ‘While wages are continuing to rise because of the acute skills crisis in our sector, firms are also feeling the pinch thanks to increased material prices. The depreciation of sterling following the EU referendum has meant bricks and insulation in particular have become more expensive.’ 

Nationwide Building’s Society’s house price index for June 2018 shows that annual house price growth fell to its slowest pace for five years. But, Nationwide’s Chief Economist, Robert Gardner commented, ‘Overall, we continue to expect house prices to rise by around 1% over the course of 2018.’

However, there was growth in the month-on-month series, with May’s construction output increasing by 2.9% compared with April’s according to ONS. This was partly driven by a 4% increase in repair and maintenance work in May, which grew to £4,741m. 

Released in July 2018, the UK government’s Construction Sector Deal has committed to investing £170 million from the Industrial Strategy Challenge Fund. This will provide funding for manufacturing technologies, R&D, and energy generation and storage technology for buildings. 

  • 84% of builders think that materials prices will continue to rise in the next six months.
  • In the three-month on three-month series in May 2018, construction output fell by £683m  
  • The private industrial sector grew in the three months to May 2018 by £89m
  • 58% of firms are struggling to hire bricklayers
Sources: Office for National Statistics, Federation of Master Builders, UK Government, Nationwide Building Society