October 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.

Monthly construction output fell 0.2% in volume terms in August 2021 with the level of output now 1.5% below its pre-pandemic (February 2020) level. The ONS report that anecdotal evidence suggests product shortages caused by supply chain issues and price rises were the main reasons for the decline.

Although new work remained flat and repair & maintenance was down 0.6% on the previous month, construction output was significantly up on August last year, and repair & maintenance work remained 2.7% (£135 million) above the February 2020 level.

Recovery overall has been mixed at a sector level, with infrastructure having seen a 45.4% rise and the private commercial sector a 26.3% decline since before the pandemic.

The IHS Markit CIPS construction purchasing managers index for September also revealed a growth slowdown in output volumes as demand has softened. UK construction companies continue to report disruption on site from unavailable transport, a severe lack of materials and staff shortages. The Total Activity Index registered 52.6 in September, down from 55.2 in August 2021.

The latest Monthly Statistics of Building Materials and Components were published by BEIS on 6th October. It shows that the material price index for ‘All Work’ increased by 23.5% in August 2021 compared to August 2020, and by 2.8% compared to July 2021, confirming prises continue to rise sharply. Both brick and block deliveries were up more than 6% compared to August last year.

The latest BMBI report confirms the construction industry saw demand soften in July 2021, with builders’ merchants seeing a 3.8% fall in sales compared to the previous month. However, sales are still at a high level; year-on-year sales were 14.5% higher in July 2021 – on two less trading days. Timber & Joinery Products (+42.4%) recorded its highest ever monthly sales since the BMBI report began, although it was flat month-on-month.

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 October update also includes statistics on the furlough scheme from HMRC, as well as forecast figures from the OECD’s latest economic outlook issued in September.

To download the latest BEIS Monthly Construction Update click here