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Sun April 11 2021

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Construction's green shoots start to show

12 Mar The British construction industry again outperformed the overall economy in January 2021.

Construction output grew by 0.9% in in January 2021 compared to December 2020, while the overall economy shrank 2.9% as the UK went into its third national lockdown.

January saw a return to monthly growth for construction output, following a 2.9% decline in December 2020.

The value of total construction output in Great Britain in January reached £13,639m, according to the Office for National Statistics.

This is still 2.6% below the pre-pandemic February 2020 level; the level of new work was 6.4% below this level, while repair & maintenance work was 4.5% above the pre-pandemic level despite a fall in January.

New work increased by 1.7% in January 2021, thanks to a 4.5% rise in private commercial work and 3.1% infrastructure growth. 

Repair & maintenance decreased by 0.4% in January 2021 because of a 4.7% fall in private housing repair & maintenance, despite growth of 5.0% in public housing and 1.3% in non-housing repair & maintenance.

In the three months to January 2021, construction output grew by 1.7% compared to the previous three-month period. The value of new work was up 2.2% and repair & maintenance rose 0.8%.

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Click on image to enlarge

Industry comment

Paul Fenner, head of construction at accountancy firm BDO, said: “Construction output suffered a minor blip in December 2020, but the latest figures for January 2021 show that the sector’s recovery is back on track.

“The more positive figures reflect a growing confidence among construction firms that the worst is behind them. Indeed, BDO’s latest survey shows that 85% of construction firms are feeling positive about their prospects for the year ahead.

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“However, risks remain and firms will need to keep a tight rein on costs and maintain strict financial discipline as we enter a very uncertain period.”

Beard finance director Fraser Johns said: “These latest figures, while positive for the future of the industry, suggest there is still a little nervousness in the market. The construction industry has already shown incredible resilience in the second half of 2020, and this 0.9% increase in output at the start of 2021 is welcome news. While we are clearly not out of the woods completely, the green shoots of recovery are beginning to show.

“It was only at the end of February that we received some clarity about the roadmap out of lockdown. Despite the construction industry remaining open throughout, some clients may have been hesitant to give the green light before they knew the timeline for a return to normal.

“The success of the vaccine rollout and the timeline now being in place should help confidence in the market grow in the coming weeks and months. As we enter spring, we expect demand to pick up quickly and bounce back as projects that have been on hold are given the go ahead.”             

McBains managing director Clive Docwra said: “As the end of lockdown hopefully draws nearer, these statistics provide further evidence that the construction industry is cautiously optimistic about its ability to bounce back after what was an incredibly difficult 2020.

“January’s growth of 0.9% could be significant given it is traditionally a quiet month in the calendar for construction, and is certainly a welcome sign of the industry’s resilience particularly in light of December’s 2.9% fall in output.

“It’s especially encouraging to see growth in most sectors, notably 4.5% in private commercial work and 3.1% in infrastructure, which suggests that investors are returning and confidence in the economy may be picking up.

“However, it remains too soon to tell what the long-term impacts of Covid-19 will be, with output still 2.6% below February 2020 levels.”

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