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Mon July 13 2020

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Construction output starts year in decline

12 Mar Construction output in Great Britain fell in January 2020, but the three-month trend showed growth.

According to the Office for National Statistics, GB construction output decreased by 0.8% (£110m) in January 2020, driven by a 2.4% (£112m) fall in total repair & maintenance. New work output remained the same as the previous month, showing zero growth.

However, comparing the three-month period of November to January with the previous three-month period of August to October 2019, construction output increased by 1.4%. This was driven by 2.4% growth in new work but offset by a 0.6% fall in repair & maintenance.

The ONS attributed the three-monthly growth to a slow October, anecdotally assumed to be due to the weather that month. A decrease in output of 2.2% in October 2019 was followed by a 2.4% increase in November 2019.

The rise in new work in the three months to January 2020 was because of growth in all sectors, with the largest positive contributions coming from private housing, private commercial and infrastructure, which increased by 2.4%, 2.1% and 1.7% respectively.

In repair & maintenance, the fall in the three months to January 2020 was because of a fall in private housing, which decreased by 5.6%; in comparison public housing repair & maintenance, and non-housing repair & maintenance increased by 2.0% and 2.4% respectively.

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The ONS numbers confirm the findings of Markit Economics, whose monthly survey of construction purchasers also indicated that January output was down on that of December. [See previous report here.]

Gareth Belsham, director of the national property consultancy and surveyors Naismiths, interpreted the ONS data positively. He said: “The acceleration in construction sector output has been breathtaking. In the space of a month, it tripled from a respectable 0.5% in the final quarter of 2019 to 1.4% in the three months to the end of January.

“After being buffeted by Brexit uncertainty for much of 2019, a sprint finish saw construction close the year as the fastest-growing sector of the UK economy. We began 2020 in afterburner territory, with developers rushing to restart and re-energise mothballed projects.

“Private sector housebuilding has rocketed back to the top spot, with new work growing by 2.4%. With total output now ticking along at 3.1% more than it was at this point in 2019, the official data confirms the surge in sentiment we’ve seen on the front line.

“But for all its momentum, this anachronistic data risks being a pre-coronavirus high water mark.  There’s a danger that the industry’s great strides could soon be tripped up by interruptions to its delicate supply chain or restrictions on labour-hungry contractors’ ability to get the people they need on site.”

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MPU

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