The latest data from the Office for National Statistics (ONS) show construction output in July 2021 was worth £257m (1.6% in volume terms) less than the month before the pandemic hit. It is the second month in a row where construction activity remained lower than pre-Covid levels according to the latest ONS figures.
Rising prices and supply chain issues were sighted as the main reasons for the decline. According to a recent Construction Index survey, respondents told the ONS that order book volumes were high, but shortages of products are impacting live projects which is hitting the industry hard in the short-term.
Weakened demand from private housing was the biggest contributor to July’s decline, which saw sharp falls in both new work, and repair and maintenance of 7.5% and 6.2% respectively compared with the previous month.
Robert Candy, Chief Executive of the Scaffolding Association, said: “Supply shortages, rising costs of materials and supply chain issues are all playing their part in this perfect storm.
“A significant amount of construction is needed in the coming decade to fulfil the government’s plan for building 300,000 new homes per annum. The uncertainty around product availability and costs is already resulting in developers pausing or rethinking their development plans which will impact these ambitious targets.
“Unfortunately there is no evidence to suggest that this situation will resolve itself anytime soon. The contributing factors are part of a global crisis, and it will be several months, if not longer, before things level out and we see some stability.”