Construction Output Grows Again
New figures from the Office of National Statistics have shown that, once again, the construction sector grew in November.
Like many other sectors, the pandemic has had an impact on the construction industry. However, the latest ONS Construction Output stats for November 2020 show that monthly construction output grew by 1.9% compared with October 2020.
This rise was due to a 3.5% increase in new work which more than offset the 0.6% fall in repair and maintenance. This is now the seventh consecutive month of growth since the record decline of 40.7% in April 2020.
November’s level of construction output was 0.6% higher than that of February 2020, with repair and maintenance work 7.4% above and new work 3.1% below its pre-COVID levels.
It is worth noting that whilst housing sectors, new work, repair and maintenance and both the public and private sector saw major falls in March and April 2020 respectively, they have bounced back strongly from April to November 2020 in comparison with other types of work.
The increase in new work was 3.5% in November 2020. This can be attributed to the growth in all new work sectors, apart from public new housing and public other new work, which fell by 2.4% and 2.8% respectively.
The monthly decrease in repair and maintenance of 0.6% n November 2020 was due to a 6.0% fall in private housing repair and maintenance, despite growth of 5.7% in public housing, and 1.9% in non-housing repair and maintenance.
Construction output grew by 12.4% in the three months leading to November 2020 in comparison to the previous three-month period, due to growth in new work, 11.9% and repair and maintenance, 13.2%.
Paul McNeil, Director at Ball & Berry, said: “This does not feel like a normal recession. At Ball & Berry we are seeing investment into construction continue across almost all sectors. From largescale projects in education, healthcare and industry, to domestic projects in which homeowners are extending and adapting their homes to suit their new circumstances, there is a lot of confidence out there.
“Retail has slowed but by no means stopped, and development in office space is picking up as the country prepares to return to more typical ways of working. We anticipate an initial move away from the co-working model, and a carving up of office space to allow for a temporary halt in the use of shared facilities.
“At Ball & Berry, we are busier than we were 12 months ago. The construction industry is buoyant. We have recruited and even opened a new London base since the pandemic began. New projects land in double figures every day and we are looking ahead with positivity, fully prepared for a busy 2021.”
Marco Verdonkschot, Managing Director of IronmongeryDirect, said: “Despite the construction industry experiencing major disruption and challenges throughout 2020, the latest official figures show that the industry is well and truly on the path to recovery.
“The seasonally adjusted data shows that total construction output has steadily and consistently risen from its lowest point of 56.8% in April, and reached 99.8% by November, which was the highest total output the industry has experienced since January 2020.
“New housing made up a quarter (25%) of all construction output, and was the largest sector for new work, which amounted to 62.8% of all output in total. The remaining 37.2% consisted of all types of repair and maintenance.
“These figures show a tremendously positive outlook for the recovery of the industry, with output once again comparable to pre-Covid levels. It’s important to remember that these statistics do not include the most recent lockdown, and the ongoing virus and future lockdowns will always be a threat to the health of the industry.
“However, it’s clear from the past year that construction in the UK is an incredibly resilient sector and has the strength to bounce back from any setbacks.”
Andrew Dixon, Commercial Director SpecialistFfinance, Aldermore, said: “Despite the unprecedented impact of the Covid-19 pandemic on the economy, the UK construction industry has been remarkably resilient. While construction workers were forced to down tools during the first national lockdown in March, since then the sector has bounced back strongly.
“All construction output has now recovered above its pre-pandemic level for the first time and November 2020 marked the seventh consecutive month of growth. Our own experience with Aldermore clients mirrors these official figures with turnovers returning towards where they were when the pandemic began.
“Looking ahead, the prospects for construction companies in 2021 are encouraging with sectors such as housebuilding an ongoing national priority. Despite the new lockdown measures, the housing market has not closed down and schemes such as Help to Buy and the stamp duty holiday will stimulate buyer demand in the first half of the year. For small businesses feeling the strain of a new lockdown, the Coronavirus Business Interruption Loan Scheme remains available until March, so there is support for those that need it.”
Duncan Firth, Managing Director of Walker Sime, a construction consultancy practice, headquartered in Manchester, comments: “Construction was one of the hardest hit sectors, falling by 44% in the first lockdown. However, performance since then has been very strong – pretty much the proverbial ‘V – shaped’ recovery, and one of the few sectors to have recovered to pre-covid levels.
Construction order books in November were at their highest level in six years. Some of this was driven by catch up of projects deferred earlier in the pandemic, but November in particular saw big growth in new tenders.
The Commercial sector continues to lag of course due to uncertainty about future demand for office space.
Overall the sector looks fairly resilient given the circumstances. According to a recent ONS survey (just before Christmas), 8.4% of construction businesses are not confident about surviving the next three months (versus 10.8% across all industries, and 28% in hospitality).
Given the positive news on covid vaccines and the negative news on the more virulent strain, the outlook is mixed, but the sector continued to grow through the autumn restrictions and November lockdown. To date, as a sector, we have proved our resilience, which bodes well for what may come in 2021.”
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