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Tue November 24 2020

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Construction starts to struggle to reach pre-Covid output

12 Nov Construction output in Great Britain grew by another 2.9% in September, compared to August but is still well below pre-Covid levels, official statistics show.

The level of construction output in September 2020 was 7.3% below that of February 2020, with only infrastructure and private new housing having returned to above their pre-pandemic levels of output.

All other types of work in September 2020 have yet to recover, with public new housing 29.4% below its February 2020 level.

The Office for National Statistics reports that construction output in Great Britain grew by 2.9% in the month-on-month all work series in September 2020, driven by increases in both new work (2.7%) and repair and maintenance (3.4%).

September was the fifth consecutive month of growth – since May – but this was the lowest, softest rise since the return to growth.

However, while the monthly statistics have softened, summer numbers were strong enough to see the third quarter breaking records for growth (but only due to the lows of the spring lockdown),

Quarterly construction output grew by a record 41.7% in Quarter 3 (July to September) 2020 compared with Q2 (April to June) 2020. This was driven by record quarterly growth in both new work (40.8%) and repair & maintenance (43.4%).

The largest contributor to that growth in new work was private new housing, which grew by 84.4% in Q3 2020 compared with Q2 2020.

New orders grew by a record 89.2% in Q3 2020 compared with Q2 2020, following the record quarterly fall in Q2 of 54.0%.

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Following this record quarterly growth, new orders returned to a level comparable with 2019, just 0.6% above the Q3 2019 level.

The record new orders quarterly growth (89.2%) was because of 88.7% growth in new housing and 89.4% in all other work; public new housing was the only sector to decline in Quarter 3 2020 compared with Quarter 2 2020, falling by 1.8%.

The annual rate of construction output growth was 0.4% in September 2020.

Both the monthly and quarterly indices for the most recent period show that output remains below the pre-pandemic level
Both the monthly and quarterly indices for the most recent period show that output remains below the pre-pandemic level

Commenting on the numbers, Beard finance director Fraser Johns said: “The headline figures of quarterly record growth in all areas of work is welcome news. But what is more telling is the monthly rate of growth, which is slowing down consecutively throughout the period, with September showing the lowest rate of growth at 2.9%.

“What we saw in Q3 was the return of a lot firms that had closed their sites in Q2, and projects that were put on hold getting the green light. But also the sector as a whole had become much better at dealing with Covid-19 and was able to get back to business to a certain extent.

“The slowdown in the rate of growth in September possibly reflects the level of uncertainty at that time across the economy as the prospect of a tough winter ahead loomed. So it may be that with the positive news of a vaccine in recent days that uncertainty dissolves as we head through Q4.

“But at the same time the likelihood of a no-deal Brexit is also drawing closer and what that means for the availability of labour onsite, as well as challenges in the supply chains we’re seeing, could hamper efforts to go above and beyond pre-Covid levels of growth.”

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