February rain blamed for declining output

Industry leaders have highlighted project delays caused by heavy rain after construction output declined in February.

The latest Office for National Statistics data points to reversed fortunes for the construction sector, after last month’s figures reported a return to growth. Overall output fell by 1.9 per cent during the month, driven by a drop in housing work. 

Clive Docwra, managing director of construction consultancy McBains, said the figures represented “a case of one step forward, two steps back for the construction sector”.

He said heavy rainfall had led to delays in planned work, particularly for private commercial builds and non-housing repair and maintenance.

Beard Construction finance director Fraser Johns said it was evident from his firm’s experience that poor weather had contributed to declining output.

Adrian Bingham, partner at law firm Collyer Bristow, said that while winter weather undoubtedly contributed to the sector’s gloomy showing, the impact of new regulation and the increase in legal liability “should not be ignored”.

He said: “The Building Safety Act continues to make developers nervous, as the 30-year liability it imposes creates risks for practically any project they work on.

“Most recently, biodiversity net gain rules have come into force, meaning that in addition to more rigorous safety standards, developers now have a major set of environmental obligations to meet.”

Homebuilders had the worst month. New public housing output fell by 6.6 per cent, reversing a three-month rise. Overall, new housing work declined by 3 per cent.

Allan Kelly, restructuring advisory partner at FRP Advisory, said the homebuilding sector had been subdued by high interest rates for over 18 months.

He said: “With the base rate forecast to fall in the coming months, inflation dropping – both of which should help put money back into people’s pockets – and the government having recently published its long-awaited guidance on second stairways in tall buildings, contractors will be hopeful of a resi-led recovery through the course of the summer.”

Kelly added that construction insolvency rates would likely remain high in the near future, as recent collapses spook trade creditors, and projects held up by poor weather exert a strain on cashflow.

New private commercial work continued its downward trajectory, shrinking by 4 per cent in February, following a 3.4 per cent decline in January.

Private housing repair and maintenance was the only sector to grow, reporting a modest 0.2 per cent increase in work.

Docwra said: “Although inflation may be falling, the cost of borrowing remains prohibitive, which is stifling wider investment.

“Given this uncertain economic landscape, and with a general election on the horizon, we can expect the industry to experience similar ups and downs over the next few months.”

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