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Material shortages continue to hold back construction output levels

The latest official figures have revealed that construction output has fallen again, dropping for the fourth consecutive month.

Output fell by 1.6% in July 2021 compared with June 2021, falling to £13,660 million, and follows the 1.3% monthly decline in June 2021.

The monthly index in July 2021 fell for the fourth consecutive month following strong increases in February and March 2021:

Construction output

The level of construction output in July 2021 was below its pre-COVID-19 pandemic February 2020 level. New work, and repair and maintenance both contributed to the monthly decline, with anecdotal evidence from businesses suggesting that price increases and product shortages caused by supply chain issues were the main reasons for the decline.

Monthly index, chained volume measure, seasonally adjusted, Great Britain, June 2016 to July 2021:

 

Anecdotal evidence received from survey returns to the Monthly Business Survey for Construction and Allied Trades suggested that the rising prices of raw materials such as steel, concrete, timber and glass was a contributing factor to the monthly fall in volume terms. Anecdotal evidence also suggested supply chain issues were a factor, with many contributors stating that while order books were healthy, the availability of certain construction products was impacting on projects currently under way.

Comments made by UK Landscape Barometer participants expressed the same concern, with commercial landscapers and those working in design and build feeling especially concerned. One participant said: “Material price increases and the lack of material supplies are having an adverse effect on trading.” Another respondent said: “order call offs dropped off a little due to supply chain issue” and another mentioned that “the material shortage is continuing to impact our projects.” To find out more about the UK Landscape Barometer findings for July 2021, the full report will be available from 23 September.

 

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