September Construction Update from BEIS

The latest Monthly Construction Update from the Department for Business, Energy & Industrial Strategy (BEIS), which uses the Builders Merchant Building Index (BMBI) as one its sources, is now available.

Disappointingly, the latest figures confirm that construction output fell by 1.6% in July 2021, with the level of output now below its pre-pandemic level (February 2020). Both new work and repair and maintenance 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 fall.

New work was hit the hardest, while repair & maintenance remains resilient. Although output fell in July 2021 compared to the previous month, repair and maintenance work remains 0.6% (£27 million) above the February 2020 pre-pandemic level.

The IHS Markit CIPS construction purchasing managers index for August also indicated that the pace of growth in output volumes has started to ease. UK construction companies also reported sustained and severe supply chain disruption. The Total Activity Index registered 55.2 in August, down from 58.7 in July 2021.

The OECD updated its Economic Outlook in May 2021, in which it projects UK GDP will grow by 7.2% in 2021 and by 5.5% in 2022.

The latest BMBI report confirms the construction industry saw record sales in June 2021, with builders’ merchants seeing their best ever quarter since the BMBI began in July 2014. The June index remained strong at 149.7. Ten of the 12 categories saw growth, with Landscaping and Timber & Joinery particularly strong, and price increases likely to have played a part.

As well as the figures above, the update includes an assessment of the impact of Covid-19 and the ‘Business insights and impact on the UK economy‘ publication, which is based on responses from the voluntary fortnightly business survey (BICS), and construction sector forecasts by Experian and by the Construction Products Association.

The September update also includes statistics on the furlough scheme from HMRC, as well as highlights from the latest Monthly Statistics of Building Materials and Components report.

To download the latest BEIS Monthly Construction Update click here