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Material and labour shortages dampening construction output

Construction output fell 1.8% in October 2021, representing the largest monthly decline since COVID-19 sent construction into chaos in April 2020. This fall means the level of construction output in October remained 2.8% below the February 2020, pre-coronavirus level.

Unfortunately, new work also fell by 2.8% from September to October 2021. Repair and maintenance however, remained unchanged.

Similarly to recent months, anecdotal evidence from businesses continued to suggest that product shortages caused by supply chain issues leading to subsequent price rises in raw materials such as steel, concrete, timber and glass, were an important reason for the decline.

At the sector level, main contributors to the monthly decline were infrastructure and private new housing, which decreased 7.1% and 4.4% respectively; these decreases were partially offset by increases in private industrial and public other new work of 8.8% and 7%.

The extent of recovery to date, since the falls at the start of the coronavirus pandemic, has been mixed at a sector level, illustrated with infrastructure performing strongly (36.7% or £688m) while private commercial was still some way below (26.9% or £670m) its February 2020 level in October 2021.

In line with the monthly fall, construction output fell by 1.2% in the three months to October 2021. This was due to a 1.5% fall in repair and maintenance (mainly because of a 3.5% fall in non-housing repair and maintenance) and a fall of 1.0% in new work.

Mark Robinson, group chief executive at public sector procurement group Scape, said: “October witnessed the peak of the fuel crisis, port delays and a shortage of HGV drivers. The impact these have had on existing supply challenges, combined with ongoing labour shortages, mean that it’s no surprise that output has taken a knock.

“A potential new wave of Omicron cases and the introduction of restrictions to curb it – on top of ongoing concerns around inflation – mean that 2022 is also likely to be characterised by challenges. Allowed to go unchecked, these developments will only exacerbate existing labour and supply shortages, which will significantly dampen the sector’s ability to pursue further growth and continue supporting the UK’s economic recovery.”

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