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Tue May 11 2021

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Construction’s bounce-back flattens out

11 Dec 20 Construction output in Great Britain grew by 1.0% (£128m) in October 2020, compared to September – the smallest month-on-month rise since Covid-19 took its toll.

Enabling works for HS2 has helped infrastructure ouput rise beyond pre-Covid levels
Enabling works for HS2 has helped infrastructure ouput rise beyond pre-Covid levels

According to the Office for National Statistics, October’s 1% growth was driven by a 2.3% growth in repair & maintenance work; new work grew by just 0.3%. Overall, output increased in all sectors, apart from private new housing and private commercial new work, which fell 1.9% (£56m) and 1.5% (£30m) respectively.

The growth in October 2020 is the sixth consecutive month of growth since the record monthly decline of 41.2% in April 2020 but is the smallest monthly increase in that time.

And at £13,066m, the level of construction output in October 2020 remained 6.4% (£898m) below February 2020, with only infrastructure having recovered above this pre-lockdown level of output.

In the three months to October 2020, construction output grew by 24.9% (£7,677m) compared with the previous three-month period, because of increases in every sector. This is the second consecutive period in the three-month on three-month series where every sector has seen growth. However, growth in all sectors has inevitably slowed as they return to more normalised behaviours after the record declines in April 2020.

Source: Office for National Statistics
Source: Office for National Statistics

Federation of Master Builders chief executive Brian Berry said: “The recovery in the construction sector is far from secured… It is encouraging that the repair, maintenance and improvement (RMI) sector is still doing well with 26.8% growth over the last three months. However, there is increased concern about the availability of building materials because of import issues and the growing uncertainty about Brexit. 78% of builders are forecasting material shortages in the coming months and prices are rising across the board.”

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He added: “While it is good to see boosted activity in the RMI sector, falling activity in the new build housing sector is a cause for concern.”

The National Federation of Roofing Contractors (NFRC) also voiced concern about the current materials shortage turning to crisis.

NFRC chief executive James Talman said: "The government’s support for construction has been most welcome and has clearly born fruit, as seen in today’s data, but it must not be undermined by the supply chain being unable to deliver due to a lack of government preparation for a no-deal Brexit. While the construction industry has performed well over the last few months, there could be chaos at our ports in January if the government doesn’t put the right mechanisms in now, for a no-trade deal scenario. This could have knock-on impacts on the whole supply chain, prolonging already extended lead times on certain products, that we have seen in 2020 due to Covid-19, such as timber.

"We know that our manufacturing members’ supplies are already being turned away from some ports and this is even before the end of the transition period. We have serious concerns that a lack of preparation on the part of the government could have a major impact on industry being able to bring in products and raw materials critical to UK infrastructure and housebuilding. There is also much uncertainty in the market around any future tariffs making it very difficult for businesses to plan for the year ahead.”

He concluded: “It is looking unlikely at this stage whether we will reach a deal with the EU. Government should therefore ramp up its support for industry to prepare for this scenario. The prime minister should also now seek to extend the transitional arrangements on the movement of goods and defer the possible implementation of any tariffs”

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