Sector - Finance & Legislation
Construction Output for May 2020
Newly released figures from the Office of National Statistics (ONS) show that construction output grew by a record 8.2% in the month-on-month all work series in May 2020. This follows on from a record decline of 40.2% in April 2020.
These figures show that the level of construction output is now down 38.8% on February 2020, the month before lockdown was introduced and before the impact of the Coronavirus (COVID-19) pandemic came into play.
In the three months to May 2020, construction output felling by a massive 29.8%, this is in comparison to the previous three-month period, this was driven by record falls of 30.3% in new work and 28.9% in repair and maintenance.
This decrease in new work, 30.3%, in the three months to May 2020 was due to falls in most of the new work sectors, for example, private new housing and private commercial were the largest contributors, falling by 42.5% and 29.5% respectively.
The decrease in repair and maintenance, 28.9%, in the three months to May 2020 was due to record falls within all repair and maintenance sectors, with the largest contributor, private housing repair and maintenance, falling by 39.8%
Gareth Belsham, director of the national property consultancy and surveyors Naismiths, commented: “Even by the construction industry’s volatile standards, this is white knuckle stuff.
“April’s gravity-defying 40% plunge in monthly output was twice as bad as the contraction suffered by the economy as a whole. Yet May’s 8.2% surge in construction is more than four times better than the growth seen in the wider economy.
“Impressive though the jump in growth is, output is still a shadow of its pre-Covid level and even though building sites have finally reopened across the UK, productivity is likely to be hampered by social distancing restrictions for months to come.
“Nevertheless this is the start of the industry’s fightback. May saw records smashed across the board for the pace of month-on-month growth.
“Private sector housebuilding surged by over a fifth, and public sector residential construction leapt by a scarcely credible 42.1%.
“However, these are still very early days. While the absolute worst may be past, the industry is still braced for the whiplash effect of what may be a long and painful recession.
“Fragile business confidence and weak levels of investment will continue to constrain demand for many months, and the road to recovery will be long and hard. But at least it starts here.”
Ian Wardle, CEO of Thirteen Group said: “In the July release of the Office of National Statistics review, unfortunately the economy has not rebounded in the way that many economists had forecast. While this is concerning, it is not to be unexpected as companies try to reclaim lost time, money and production from the lockdown. This means we need to concert our efforts further to invest in development and construction to support the local economy and we will continue to secure sites and build homes.”
Parm Bhangal Managing Director of Bhangals Construction Consultants, added: “Since construction shut down due to Covid 19, construction output has significantly dropped in accordance with the stats. Once the government decided to let sites re-open, output was going to increase although the new output is significantly lower. From our business we found that in the first few weeks we had an influx of client enquiries because they had pressing issues which had been on hold, however since then we have seen a significant reduction in enquiries.
“In terms of recovery rate, looking at the stats it appears that this is going to take a significant amount of time to recover and although the government are increasing infrastructure construction it will be some time before we see pre-covid construction numbers.
“The industry has seen a lag in materials on site which has also had a detrimental impact on construction and trades not being able to work because of limited materials availability. This will also impact up and coming tender and contractors are likely to increase prices because they cannot get hold of materials easily and they are more difficult to procure which takes more time and costs more money.
“With the furlough scheme coming to an end this is going to have a detrimental impact on the economy with unemployment going up and less consumer confidence. We feel that the private construction industry will get hit hard and construction output is not likely to increase much this year.
“With social distancing measures in place it makes productivity on site tougher and contractors will start putting up prices and developers may find themselves in a position where projects are unfeasible so will look at holding projects.”
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