Construction slows sharply – “hard to dismiss as teething problems”

The sharp slowdown in construction industry output revealed by the ONS today was no surprise but experts have predicted a slow recovery ahead.

Gareth Belsham, director of the national property consultancy and surveyors Naismiths, commented:

“It’s getting increasingly hard to dismiss construction’s supply woes as mere teething problems.

“Soaring prices for key materials like steel, timber and fuel aren’t just eating into builders’ margins. Widespread shortages and long delays are creating a creeping sense of uncertainty that is prompting some developers to contemplate pausing their developments until things calm down.

“The latest PMI data showed new orders are now coming in at the slowest rate since March.

“The slowdown is most worrying in private housebuilding, which has long been a star performer but saw levels of new work shrink by 7.5% in July.

“In some parts of the country the shortage of materials is so bad that contractors are struggling to fulfil the orders they do have.

“While sentiment across the industry remains generally upbeat, the supply chain problems are steadily stifling growth. With this latest fall in output, the industry is now a quarter of a billion Pounds smaller than its pre-pandemic size.

“The recovery is still on, but it’s running out of steam and the road ahead is strewn not just with speed bumps but boulders too.”