New construction orders fell by 12.4% in the first quarter of 2023 compared to the last quarter of 2022 - equivalent to more than £1.57bn - the latest figures from the Office for National Statistics (ONS) show.

A 22% drop (£773m) in private commercial construction orders and a £607m drop (18.4%) in private housing new orders was seen in January to March 2023, compared to the previous quarter.

Overall, construction output across the quarter rose 0.7% compared to the previous quarter, despite the decline in new work, with a rise in repair and maintenance of 4.9% and a 1.9% decline in new work.

This was the sixth quarter of consecutive growth reported by ONS since Quarter 3 of 2021.

However, the ONS also reports quarterly growth has slowed in comparison with the first half of 2022. 

Seven out of nine sectors saw increases in Quarter 1 2023, with the largest contributors being private housing repair and maintenance, and non-housing repair and maintenance. 

These sectors increased 5.7% (£411 million) and 3.9% (£341 million) respectively. 

There has been continued strength within the repair and maintenance sectors across 2022 and early 2023, with all repair and maintenance sectors increasing on the quarter.

Anecdotal evidence highlighted the effect of weather, in January 2023 in particular, with firms noting that adverse weather conditions increased the need for repair work. 

Improved weather in February 2023 allowed for more work to be done in general.

Construction output across the months within Quarter 1 2023 was volatile, with a fall of 1.6% in January 2023, followed by two months of growth in February and March 2023, 2.6% and 0.2%, respectively.

The ONS also reported monthly construction output was estimated to have increased 0.2% in volume terms in March 2023, with a 0.7% increase in new work and a 0.6% drop in repair and maintenance.

The monthly construction output rise of 0.2% in March 2023 followed an upwardly revised 2.6% increase in February 2023 - the highest level of construction output -at more than £15.6bn - since records began in January 2010.

In March, new infrastructure work rose 2.2% (£51m) and public other new work rose 6.5%. (£48m).

The ONS report also cited anecdotal evidence received from returns for its Monthly Business Survey for Construction and Allied Trades (MBS) suggesting an easing of inflation and material costs. Despite this, some businesses still noted customers hesitating to request work because of economic worries.

The annual rate of construction output price growth was 8.5% in the 12 months to March 2023 - slowing slightly from the record annual price growth found in May and June 2022 (10.4%).

The largest negative contributor across quarter one was private new housing, which fell 5.3% (£543 million). 

Anecdotal evidence suggests a general slowdown in housing across recent quarters, particularly referencing economic uncertainty causing delays and customers hesitating to request work.

This is in line with the PMI survey March, which demonstrated the fastest decline in housing activity since May 2020 – something that continued into April - despite a marginal rise in total construction output.

Tim Moore, economics director at S&P Global Market Intelligence, which compiles the PMI survey, said housing was the “main area of concern” in March - but added lots for the sector to be positive about. 

"Cutbacks to new residential projects in the wake of subdued demand and rising interest rates contributed to the sharpest fall in housing activity across the construction sector for almost three years.” 

April’s PMI survey also described construction sector growth in April as “lopsided” amidst rising interest rates, marked by a continued decline in housebuilding.