Bad weather in January blamed for weakest performance since last June

Construction output dropped at the beginning of the year, despite a return to growth across the economy as a whole. 

The latest GDP figures released today by the Office for National Statistics showed monthly construction output was down 1.7% in volume terms in January, the weakest monthly performance since last June, when output dropped 2%. 

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Source: HM Treasury

Contractors will be looking to chancellor Jeremy Hunt鈥檚 budget next week for a steer on the government鈥檚 investment plans

The decline was driven primarily by a 4% fall in new work, which was only partially offset by an increase in repair and maintenance work (2%). Bad weather at the start of January was also blamed for the slump

There was a stark drop in new infrastructure work (6.5%) as well as private housing new work (3%). 

The ONS said returns from its monthly business survey for construction and allied trades 鈥渃ontinued the narrative around economic uncertainty leading to delays, cancellations and less work being requested by customers in general鈥�, with heavy rainfall at the beginning of the year also having an impact. 

Economy-wide, monthly GDP grew by a stronger than expected 0.3% in the first month of the year, after falling 0.5% in December 2022. 

Mark Robinson, chief executive of procurement body Scape, said it was 鈥渦nfortunate to see a dip in output after a resilient end to 2022鈥� and added the industry would be looking to next week鈥檚 budget for 鈥渁 steer on the government鈥檚 intentions and how this might affect workloads鈥�. 

鈥淲hile a public sector spending spree looks unlikely, with local authorities being told to keep the purse strings tight, firms might be left hopeful by the recent news on enhanced tax receipts and underspending in various government departments,鈥� he said. 

Clive Docwra, managing director of consultancy McBains, said it was clear the fall in infrastructure new work was 鈥渁 particular worry鈥�, given the sector has 鈥減ropped up鈥� the industry鈥檚 performance in recent months. 

He welcomed reports that the budget could see the government make changes to the points-based immigration system to allow construction, which he said was 鈥渉amstrung by skills shortages鈥�, to recruit more foreign workers. 

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