The Office for National Statistics’ latest data release reported that all work construction output decreased by 0.5% in the year to August 2023. New work output declined by 1.5% over the same period. The construction industry overall has offered durable activity levels after the pandemic until now, despite emerging weakness elsewhere in the economy. However, sub-sector output data reveals changes that the overall output narrative might not immediately convey.

In a stark change to the narrative for many recent years, private housing output volume dropped by 15% in the year to August 2023. Housing output is expected to continue posting reduced levels of activity over the remainder of 2023 and into 2024, although it is declining from a very high nominal level of output. Some of the latest falls in housing output were offset by increases in the infrastructure and the repair and maintenance sub-sectors, but these rises need to be sustained in order to ensure the industry does not generate adverse headlines about notable falls in total output.

Construction output trends are evolving to sketch a different picture expected for the next period of this market cycle. The bounce-back in activity after the initial stages of the pandemic saw a one-way market across much of the industry. Although total industry output adjusted for inflation did not quite reach pre‑pandemic levels, it was a sustained period of improving total workload and activity.

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