New orders up but construction output flatlined in first quarter

Latest News Fri, May 16, 2025 5:59 AM

Total construction new orders increased by 26.6% in 1Q2025 compared with 4Q2024, with £11.6 billion worth of work committed to, according to the latest ONS data.

On an annual basis, this represented 10.5% more than in the same quarter last year.

But construction output showed no growth between the final quarter of 2024 and first quarter of 2025. New work output was up by 0.9%, but a 1.2% decrease in repair and maintenance (R&M) output was enough to produce no overall movement.

On an annual basis, comparing 1Q2025 with 1Q2024, new work increased by 1.7% while R&M showed zero growth, producing an overall 0.9% rise in output.

The increase in monthly output in March 2025 came from increases in both new work, and repair and maintenance, which grew by 0.6% and 0.4%, respectively.

Anecdotal evidence from survey returns noted the positive effects of warmer and milder weather.

At the sector level, five out of the nine sectors grew in March 2025; the main contributors to the monthly increase were private housing and infrastructure new work, which rose by 2.3% and 2.5%, respectively.

Dr David Crosthwaite, chief economist at BCIS, said: “The new orders data presents a more positive picture than the output figures covering the first quarter of the year.

“However, the government must be concerned that private housing orders were down, suggesting the targeted 1.5m new homes to be delivered over this Parliament might present even more of a challenge than anticipated.

“The long-term downward trajectory of private housebuilding is clear. There have been pronounced declines following events such as the financial crisis in 2008-09 and COVID in recent decades, but the overall trend points to bigger structural changes in the delivery pipeline rather than short-term volatility.

“It’s hard to see how current order volumes are going to translate into completions at the scale required.

“While the whole economy showed slightly better than expected growth in the first quarter of this year – GDP grew by 0.7% – construction was much more subdued.

“Rather than getting ‘Britain building again’ construction is stagnating and the government must take some positive steps to try and address this.

“Hopefully the upcoming Spending Review and promised pipeline update will provide some solace for the sector.”

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