Business investment in the construction industry remains 10% below pre-pandemic levels after undoing some of its gains in the second quarter of the year, according to the latest ONS data.
Business investment in the sector fell 2.2% on a quarterly basis to £2.5bn in Q2, following a marked upward revision for Q1 which registered a 49% gain compared to the end of 2020, according to analysis of the latest ONS data by business tax relief specialists Catax1.
However, the industry is still catching up with pre-pandemic norms amid supply chain difficulties. Its performance between April and June represents a 5.4% annual fall leaving it 9.3% below the £2.8bn registered for Q2 2019.
Business investment in the construction industry is now 40.2% below its record high of £4.3bn recorded in the first quarter of 2020, recorded right on the cusp of the pandemic.
The sector trailed the UK’s overall performance in Q2. Overall business investment nationally rose 4.5% compared with the first quarter of the year, and grew 12.9% on an annual basis2.
By comparison, UK GDP increased by 5.5% in Q2 — leaving it 3.3% below where it was pre-pandemic (Q4 2019)3.
The ONS business investment statistics are an indication of net capital expenditure by UK businesses, which includes spending on items such as plant and machinery, transport equipment, software and buildings.
Mark Tighe, CEO of business tax relief consultancy Catax, comments:
“The construction industry is still playing catch up but the slight retreat in business investment in the second quarter shouldn’t detract from what it achieved in the first. Business investment exploded in Q1 and, though the performance between April and June is disappointing, we’ve seen significant upward revisions in both the industry and national data that could yet happen again. The only headwind that’s going to continue to weigh on the sector’s ability to fight back to its pre-pandemic level are the supply chain problems that seem to be affecting every major industry that depends on the transit of goods.”