Construction output
Construction output grew by 0.8 percent in Q3 compared with Q2, the first quarterly increase since Q3 2023. This came solely from an increase in new work (2.0 percent), as total repair and maintenance (R&M) fell by 0.6 percent.
Within new work, private industrial (3.9 percent), infrastructure (2.8 percent) and other public works (2.6 percent) were the strongest performers.
Within R&M sub-sectors there was a mixed picture in Q3. Public housing grew by 5.0 percent, but private housing fell by 5.8 percent. Non-housing R&M was up by 2.6 percent.
On an annual basis, construction output decreased 0.4 percent, although all R&M increased by 4.8 percent, primarily driven by public housing and non-housing sectors. Other public and private industrial sectors experienced strong growth.
Infrastructure output declined by 8.8 percent in Q3, continuing a trend that began with the cancellation of the northern leg of HS2 in Q4. However, some of the project announcements and funding commitments in the Budget are expected to reverse this trend. Private industrial output fell by 4.2 percent due to weak demand for traditional office space, although warehouses and data centres continue to perform well.
Source: Office for National Statistics
Construction new orders
After posting strong growth figures in Q1 and Q2, the Q3 new orders data was disappointing, falling by 22.0 percent compared to Q2.
The largest contributor to this decline was other new work new orders (non-housing), which contracted by 18.3 percent in Q3. Sub-sector data shows a 20.8 percent fall in private commercial new orders, driven by lower orders for offices, entertainment and shops, according to the ONS. Public new orders for other new work also collapsed by 28.0 percent.
Housing new orders decreased by 32.6 percent, primarily due to the 31.3 percent fall in private new housing.
The only bright spot was infrastructure, with new orders up by 0.8 percent for the quarter.
However, new orders were 9.4 percent lower compared to the same quarter a year earlier. While infrastructure outperformed the sector with 35.6 percent growth, all other sub-sectors struggled. Private housing continues to underperform due to high prices and borrowing rates, and private industrial new orders fell by 14 percent.
Some of the optimism from previous quarters was replaced by increased uncertainty before the Autumn Budget. Nevertheless, the Budget announcements, along with expected planning reforms and infrastructure strategy, bode well for the sector.
Source: Office for National Statistics
