Repair and maintenance work surpasses new business growth in January

Neon Mavromatis, Managing Director Construction, Kerry London, summarises the latest data from the Office of National Statistics (ONS) regarding monthly construction growth.

Monthly construction growth increased by 1.1% during January 2022 and is now at its highest level since September 2019; this follows an increase of 2% in December 2021 and is the third consecutive monthly growth greater than 1%. The increase in monthly construction growth in January 2022 came solely from an increase in repair and maintenance (4.6%), while new work saw a slight decrease of 0.8%. 

The level of construction growth in January 2022 was 1.4% (£197 million) above the February 2020 pre-coronavirus (COVID-19) pandemic level. New work was 2.8% (£267 million) below the February 2020 level, while repair and maintenance work was 9.3% (£464 million) above the February 2020 level.

Sector growth: Housing and infrastructure drive increases

The 1.1% rise in construction growth in January 2022 represents a rise of £162 million in monetary terms compared with December 2021.

Six out of the nine sectors saw an increase in monthly growth in January 2022; private housing repair and maintenance and non-housing repair and maintenance were the main contributors and grew by 5% (£98 million), and 5.5% (£143 million), respectively. Private commercial work is still experiencing lower levels of growth than its pre-pandemic levels.

The monthly growth in private industrial new work (2.1%) is also noteworthy because it represents a return to above its pre-coronavirus (COVID-19) pandemic February 2020 level of output.

Infrastructure new work, public other new work, and public housing repair and maintenance were the three sectors that fell in January 2022, decreasing by 4.7% (£128 million), 9.1% (£68 million), and 0.6% (£4 million), respectively.

Despite the relatively significant decrease in monthly growth in infrastructure, which was the largest decline since April 2020 (down 23.0%), the sector has performed strongly over recent months. It was the main contributor to the growth in the three months to January 2022 (Figure 6).

Three-month on three-month construction output growth in January 2022

Construction output rose 3.0% (£1,275 million) in the three months to January 2022. This is the most substantial growth in the three-month-on-three-month series since June 2021 (3.4%). Increases in both new work and repair and maintenance (4.0% and 1.4%, respectively) contributed to the growth, but infrastructure new work and private housing new work provided the most significant contributions to the three-monthly rise, increasing by 5.2% (£388 million) and 3.4% (£306 million), respectively.

Public other new work and private housing repair and maintenance were the only two sectors to have seen falls in the three months to January 2022, decreasing by 3.6% (£86 million) and 0.5% (£33 million). The strength in the three months to January 2022 is partly because of the ease in sourcing construction products in recent months. The supply chain issues experienced in the latter half of 2021 have continued to ease in January 2022.

In October 2021, 11.0% of construction businesses could not source materials, goods, or services needed from within the UK. This has since fallen to 3.0% in January 2022.

Neon Mavromatis, Managing Director Construction, Kerry London, said, “It’s encouraging to see the construction industry has continued to demonstrate growth for the third month in a row, showing resilience despite the ongoing labour and materials shortages.

The fact that growth has primarily been driven by repair and maintenance work as opposed to new business indicates that firms are still cautious about investing in new projects. The industry will no doubt continue to exercise caution as it deals with the prolonged inflationary impact on fuel costs and additional disruption to supply chains because of the devastating war in Ukraine.”

Kerry London is authorised and regulated by the Financial Conduct Authority. The company is a leading UK independent and Lloyd’s accredited broker, which means that we work with a wide range of niche and major insurers.

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