The Building Cost Information Service (BCIS) is the leading provider of cost and carbon data to the UK built environment. Over 4,000 subscribing consultants, clients and contractors use BCIS products to control costs, manage budgets, mitigate risk and improve project performance.
Published: 14/08/2024
The Office for National Statistics (ONS) publishes monthly updates on average weekly earnings across the whole economy and by industry and sector in Great Britain. This commentary relates to ONS’s EARN02 and EARN03 datasets, which cover non-seasonally adjusted earnings, excluding bonuses and including arrears.
Annual growth in construction earnings below 4%
Construction wages, as measured by ONS’s Average Weekly Earnings dataset, increased by 3.9% in the year to June 2024. This was a decrease on the 4.2% rise seen in the 12 months to May 2024 (revised upwards from 3.8%). On the month, earnings were down by 0.3%.
Across the whole economy, the average increase in wages in the year to June 2024 was 4.6%, remaining flat when compared with May.
Annual growth in earnings has been lower in construction than the whole economy average each month since April 2023.
Source: ONS – Construction (K5AH) and Whole economy (KA5H), non-seasonally adjusted average weekly earnings, excluding bonuses, including arrears
Comparing pay at a sector level (with index K56S), construction workers saw among the lowest annual increases in average earnings across all sectors, at 3.9%. The biggest annual increases were seen in manufacturing, in finance and business services, and in the private sector. Public sector earnings saw the lowest increase in the year to June, at 3.4%.
Source: ONS – EARN02: Non-seasonally adjusted Average Weekly Earnings, excluding bonuses, including arrears, at sector level
The ONS data shows that the construction sector has experienced the most extreme fluctuations in earnings movement in recent years, from a 9.5% annual decrease in May 2020 to a 13.5% increase in May 2021.
Source: ONS – EARN02: Non-seasonally adjusted Average Weekly Earnings, excluding bonuses, including arrears, at sector level
David Crosthwaite, Chief Economist at BCIS, said: ‘Earnings growth is highly correlated to demand levels and, given that construction continues to see sluggish demand growth, then we can expect earnings growth to follow suit.
‘However, when demand picks up, as we are forecasting it will from next year, then we expect earnings growth to pick up in tandem, particularly if there are labour shortages as a result of increased demand levels.’
BCIS produces five-year forecasts of the Average Weekly Earnings construction (K5AH) and whole economy (KA5H) time series for subscribers of BCIS OpX.
To keep up to date with the latest industry news and insights from BCIS, register for our newsletter here.
