Construction Sector Soars with Highest Monthly Output in Over Two Years, Pointing Towards a Strong Recovery in 2022

Posted on 17 January 2022

Industry experts have highlighted the remarkable growth and significant surge in output within the construction sector during the latter part of 2021. In November, there was a notable 3.5% increase in workloads compared to the previous month, resulting in a total value of £14.68 billion. This achievement marked a significant milestone, as it represented the highest monthly output since September 2019 and even surpassed the pre-pandemic level of £14.48 billion recorded in February 2020, just before the UK was hit by the devastating effects of the global health crisis

Kelly Boorman, an esteemed analyst specialising in the construction industry and serving as a partner at RSM, stressed that these latest figures strongly indicate a robust recovery expected to take place in 2022. Boorman emphasised that the November construction outputs, in conjunction with the ongoing progress made in initiating previously postponed projects, serve as clear indicators of the construction sector's steady return to its pre-pandemic levels. She attributed the sector's positive trajectory to the increasing number of large-scale infrastructure projects, heightened repair and maintenance activities, and the sustained demand for private residential properties.

A noteworthy aspect of this growth is that all sectors within the construction industry experienced an upturn in output during November, with the infrastructure sector leading the way with an impressive 11.4% surge in activity. This serves as a testament to the overall resilience and positive momentum within the construction sector as a whole.

Amidst these positive developments, Mark Robinson, the CEO of Scape, acknowledged the industry's resilience as reflected in the latest data, while simultaneously cautioning about the ongoing risks posed by the pandemic. Robinson drew attention to the potential disruptions caused by the Omicron variant, highlighting its detrimental impact on exacerbating existing staff shortages. He issued a warning, stating that the construction sector may face further challenges in the coming months as it navigates through these uncertainties.

In spite of recent data released by the Department for Business, Energy & Industrial Strategy indicating a flattening of materials inflation in November, a trend not observed since September 2020, experts remain anticipatory of price increases within the construction industry for the year 2022. Of particular significance is the expectation that labour costs will be a primary driver behind these price hikes. Mace's consulting business, taking into account the persistent upward pressure on costs within the industry, recently revised its forecast for 2022, projecting tender prices to rise by approximately 4.5%. This serves as a reflection of the ongoing challenges and cost implications faced by the construction sector.

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