Housebuilding leads way in construction upswing

Construction output and notably housebuilding figures show encouraging growth, according to the latest data from the ONS.

Monthly construction output is estimated to have grown by 1.9% in volume terms in May 2024; this follows a fall of 1.1% in April 2024.

The main contributors to the monthly increase were a 2.8% increase in total new housing, with both private and public new housing increasing on the month.

Commenting on the latest numbers Beard Construction finance director Fraser Johns said: “Although more recent PMI data shows just how volatile the sector is, the news that both private and public new housing is leading this charge will be welcome to the many that rely on this sector. It is a real example of the resilience we continue to see from firms across UK construction.”

He added: “Until we see output and new orders increasing consistently month-on-month, we shouldn’t take anything for granted though. With the election now settled, the hope is we can all pick back up and continue to build momentum during the second half of the year. As we see borrowing conditions improve, with a potential base rate cut in the near future, this will certainly enable more clients to push ahead with plans.

Q New Homes director Michael Wynne echoed the positive sentiment: “Construction has gone from zero to hero in the space of just one month, moving from the being the weakest to the strongest sector of the economy in May.

“The jump in output can only be partly explained by the contrast between May’s good weather – which was officially the warmest on record – and the rain-soaked April, which delayed work on many building sites.”

He added: “Levels of new housebuilding spiked by 2.8% during the month, and while this is very welcome it’s worth remembering that this figure is flattered by comparison to the low levels seen during the first part of the year.”

He added: “A better test of the market’s health will come over the coming month, as housebuilders digest the reforms announced by the incoming Government and we anxiously await the Bank of England’s next interest rate decision at the start of August.

“The start of an interest rate cut cycle should unleash a surge of pent-up demand from both developers and homebuyers – which will determine whether today’s positive data is a blip or a bounce-back.”