Sector - Finance & Legislation
Construction Output Grows in January
Construction output in the UK grew by 0.9% in January 2021. This was in the month-on-month all work series; the return to monthly growth follows on from the 2.9% decline in December 2020.
The construction output level in January 2021 was 2.6% below the February 2020 level, just before the UK went into a national lockdown due to the Coronavirus pandemic. The level of new work was 6.4% below February 2020 while repair and maintenance work was 4.5% above February 2020, in spite of a month’s fall.
New work also saw an increase of 1.7% in January 2021; this was driven by private commercial and infrastructure, which grew by 4.5% and 3.1% respectively.
Repair and maintenance saw a decline of 0.4% in January 2021, due to a 4.7% fall in private housing repair and maintenance, despite growth of 5.0% in public housing and 1.3% in non-housing repair and maintenance.
Despite a monthly fall in repair and maintenance in the first month of 2021, all repair and maintenance sectors are still above their February 2020 pre-COVID levels, with infrastructure being the only new work sector where the level of work had recovered about the February 2020 level.
Construction output grew by 1.7% in the three months leading to January 2021; compared to the previous three-month period, there was growth in both new work, 2.2% and repair and maintenance, 0.8%.
It is refreshing to see that, despite it being almost a year to the day since the UK went into lockdown, that all aspects of construction are recovering.
Fraser Johns, finance director at Beard, 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.”
Andrew Shepherd, managing director at TopHat, commented: “One urgent requirement for Britain’s post-pandemic recovery will be ensuring that there is a growth in jobs. Construction certainly has a role to play here, but as is well known the sector has been facing a skills shortage for years now which will be hard to reverse quickly. This is where modular housing can step in and help provide jobs across the skills spectrum and in areas of the country that the Government wants to level up.
“If support for modular housing sees the sector grow, some reports reckon it could provide 50,000 high productivity and quality jobs. For context, that’s nearly a third of jobs directly involved in car making.
“Compared to the automotive industry, modular housing in the UK is still in its infancy. If supported and nourished, it could become a major employer. And even better for the Government, it could provide those jobs across the UK, helping the drive to level up the country.”
Ibrahim Imam, co-founder & co-CEO of PlanRadar says; “It is encouraging to see a V-shaped recovery for the construction sector. Growth in new work, particularly in commercial work (+4.5%) and infrastructure (+3.1%), is very promising and suggests investor confidence is returning as lockdown starts to lift. It’s a tentative sign the economy may be starting to pick up.
“The construction industry has demonstrated strength and stability during the pandemic, as the 0.9% increase in output shows. With spring around the corner and a conservative degree of optimism in the air, these numbers prove construction is definitely a bright spot in an otherwise battered economy.
“Looking further forward, I think we’ll see an increasing amount of big infrastructure projects announced, especially as part of the government’s programme to boost growth, productivity and competitiveness. This will place UK construction at the heart of the post-COVID economic recovery.”
Mike Smith, Managing Director (Direct), Virgin Media Business: “With output on the rise, there is a real opportunity for UK construction to rebound successfully in 2021. But in order to succeed, leaders must prioritise digital investment. From flexible working tools to cloud and BIM solutions, adopting technology that drives greater collaboration and efficiency will unlock long-lasting benefits for the industry and wider UK economy.
And as shown through our research with Cebr, digital investments like these will not only revolutionise working processes for employees and management, they will underpin long-term industry success – boosting UK construction by £3bn by 2040.”
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