Construction output plummets by 40% in April

Paul McFadyen, Managing Director of leading online metals supplier, metals4U. Here, he talks about what the latest ONS construction output figures could mean for the construction industry

The Coronavirus pandemic has proved to be an incredibly difficult time for the construction industry, presenting a number of unprecedented challenges and obstacles.

The latest figures from the Office of National Statistics only serve to highlight the damage that the virus and accompanying lockdown have caused to the industry, with output falling by 40.1% in April 2020, the largest fall since records began in 2010.

For many in the industry, this is shocking to see. But whilst construction has clearly suffered a significant setback and is facing a long road to recovery, it’s important to add context to these statistics because without it they are essentially meaningless.

There have been few periods in history where there has been such a large and widespread impact to business, and life as we know it. For some time, most work in the construction industry stopped outright, with building sites across the country closing in accordance with the national lockdown.

Following this period, even as construction sites began to reopen, they were unable to continue working at full capacity. Often only skeleton crews were able to work at any one time, as site managers were forced to restrict access and implement social distancing measures.

Alongside this, companies had to ensure that they had all of the necessary health and safety measures in place to be able to support these social distancing measures. Adequate onsite supervision needed to be in place and lone traders needed support.

These restrictions were always going to have a detrimental effect on the industry, as a dramatic reduction in efficiency meant that many projects could not be completed on time, a large amount of workers now remain in limited work or are not working at all, and many companies which support the industry, or rely on it, are not receiving sufficient levels of business.

The research indicates that the driving figures behind the record fall were a 41.2% decrease in new work and a 38.1% decrease in repair and maintenance.

Again, whilst concerning statistics in isolation, they make sense when given context against the current situation. New work is less likely to begin with a pandemic in the picture, and with a potential recession on the horizon, this will be a daunting challenge for the construction industry to overcome in the near future.

It’s important to say that these figures are of course concerning for the industry. Decreases of over 40% in some areas are worrying and should not be dismissed, but context against the current situation is important.

With the lockdown being eased in many areas of life, and as construction work continues, the coming months will provide a much more accurate picture of the health of the industry, and will indicate what needs to be done for a return to normality.

With that being said, it’s unlikely that we will see a quick return to pre-Coronavirus levels. Social distancing measures will need to be implemented for the foreseeable future, and this will naturally impact site efficiency and restrict the number of people allowed on a construction site at any given time.

Without a doubt, the Coronavirus pandemic has created a generational challenge for which the construction industry, as well as others, was wholly unprepared for.

The industry will have to wait for the effects of Coronavirus to settle down combined with the increasing likelihood of no trade deal when we leave the EU before we will see an upturn in productivity in the UK. Both these elements will have a profound effect on UK manufacturing which will reduce the demand for new industrial premises or site expansion.

The residential housing market will also be affected by the approaching recession; it will take time to reach the levels of employment necessary to stimulate the housing market, but once employment rates increase it will drive the construction industry back to high productivity.

By Q3 2021 we should start to see an upturn in the UK economy which will hopefully continue on the right trajectory to see the construction industry back to full strength by Q2 2023.

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