Sectors - Commercial

Construction Output for June 2020

New figures for June 2020 show that construction output grew by 23.5%, which is a larger increase than the previous record monthly growth of 7.6% in May 2020. In spite of this strong monthly growth, construction output in June 2020 still remains comparatively low at 24.8% below the February 2020 level, which was before the UK entered its lockdown due to the coronavirus (COVID-19) pandemic.

Quarterly construction output also fell by a record 35.0% in Quarter 2 (April 2020 to June 2020) in comparison to Quarter 1 (January 2020 to March 2020), due to record falls of 35.2% in new work and 34.7% in repair and maintenance.

The 35.2% decrease seen in new work in Quarter 2 2020 was due to quarterly falls in almost every sector, the largest contributor being private new housing which fell by a massive 51.25 in Quarter 2 2020, compared to Quarter 1 2020.

There was also a decrease in the repair and maintenance (34.7%) in Q2 2020, which was also due to record falls in all the repair and maintenance sectors, which fell by 46.5% in Q2 2020 compared with Q1 2020.

New orders also saw a decrease of a record 51.7% in Q2 2020 when compared with Q1 2020. This decrease is due to record falls in both all other work and new housing, which declined by 51.3% and 49.0% respectively. The value of new orders in Q2 2020 was £4,173 million, which is the lowest level of new orders since records began in Quarter 1 1964.

The release of the most recent Construction Output also saw the publication for the first time of the Construction Output Price Indices data as part of the quarterly Construction output in Great Britain bulletin. The annual rate of construction output price growth was flat, at 0.0%, in June 2020, which is the lowest rate of growth since records began in 2015.

Parm Bhangal of Bhangals Construction Consultants said: “General output in GB dropped in Q2 2020 to a lower figure than that of 2019 Q4, this happens occasionally, but is not necessarily because usually there is an increase. The dip in construction over the last few months is not surprising, since the UK has been locked down for a little under half of the year.

“Public housing also seems to have a much more detrimental impact; however, this could be due to the Government focusing on controlling the virus.

“When we look at infrastructure work, public sector infrastructure work Q2 2020 dropped to levels we seen around Q3 2002. Looking to the private sector, Q2 2020 dropped significantly, there are no levels since 1997 which are lower than this, with even the 2008 recession levels being 30% better.

“Generally, you can see the overall impact on construction in Q2 2020 has been significantly reduced, which is to be expected, however, the real test for the figures will be when we see Q3 data.”

Gareth Belsham, Director of the national property consultancy and surveyors Naismiths, commented:

“June’s record-smashing, gravity-defying spike in output shouldn’t distract from what has been a frankly brutal three months for the construction industry.

“With total output down by more than a third over the quarter and new orders shrinking to less than half the level registered during the ‘Boris bounce’ mini-boom seen at the start of the year, this is nothing if not white knuckle stuff.

“Nevertheless as the industry licks its wounds and resets, there are a few rays of light. Output has increased for two months in a row and momentum is increasing. June’s 23.5% surge was triple the 7.6% growth seen in May.

“The recovery is still young and fragile, but so far it is taking the hoped-for V-shape.

“The impact of the pandemic is redrawing the industry map too. Private sector housebuilding, for years construction’s star performer, collapsed by more than half in Q2 – more than any other construction subsector.

“With building sites now fully open across the UK, albeit operating under strict social distancing rules, the fightback starts here.

“But the pipeline of new work is slowing alarmingly fast. The total value of new orders placed in Q2 sank to the lowest level seen since records began more than half a century ago.

“The construction industry is a master at riding out recessions, but this one is likely to test it like never before.”

If you would like to read more like this, then please click here

Click here to subscribe to our weekly newsletter >>