Construction Output Growth Slows in August
Construction output which was released on Friday 9 October 2020 by the Office for National Statistics (ONS) shows that growth in the construction industry slowed to 3.0% in August 2020. This follows record monthly growth of 21.8% in June 2020 and growth of 17.2% in July 2020.
The level of construction output in August remains 10.8% below the February 2020 level. However, construction output grew by a record 18.5% in the three months leading to August 2020 in comparison to the previous three-month period, following ten consecutive periods of decline.
This growth was driven by record three-month on three-month growth in both new work (17.55%) and repair and maintenance (20.3%).
The increase in new work, 17.5% in the three months to August 2020 was due to growth in al new work sectors, with the exception of private industrial, which actually fell by 6.5%. the largest contributor to the growth was private new housing, which grew by 34.9%.
The increase in repair and maintenance of 20.3% in the three months leading to August 2020 was due to record growth in all repair and maintenance sectors. The largest contributor to this was private housing repair and maintenance, which grew by 35.6%.
Adrian Attwood, Executive Director at DBR (London) Limited said: “The figures indicate that the construction bounce-back of June and July has slowed dramatically in August. This may be an indicator of the industry’s output levelling out, although the usual August holiday season would not have had an impact on this year’s figures. The construction industry has proven to be resilient through these times and is coping well with the extra precautions required on site. However, we are now moving into winter and productivity will certainly fall, along with sickness resulting from the increase in coronavirus and the increase in winter colds causing uncertainties about returning to work until receiving a test.
“The heritage sector has remained in relatively good health mainly due to catch up. But the instant decline in tourism and the rapidly dwindling funds of heritage custodians relying on footfall, sales and events is going to have a serious effect on project values and will undoubtedly be curbing pipeline projects, leaving building owners to focus on the essential maintenance only. Without substantial funding for the heritage sector, the decline in workload will continue through the winter until a vaccine is available to calm the markets and boost confidence.”
Simon Yung, Head of New Homes at ODS Construction said: “Getting over the initial shock has been relatively quick for the construction industry. As a dynamic and driven industry with lots of livelihoods depending on it, most of the sector has adapted well to the new COVID requirements for safe working.
“However, productivity will remain a challenge on sites while maintaining these new ways of working. The GDP figures are a testimony to the fact that industrial and commercial construction are not faring so well. I suspect this has less to do with site productivity and more to do with client confusion – will we ever return to the office? What is going to happen to the city centres? There is a lot of uncertainty and ambiguity around what the new normal will look like. It will undoubtedly take time to adjust.
“To emerge stronger from the COVID-19 crisis, companies need to be proactive, start investing in reskilling their workforces, re-tooling how they do business and focusing on keeping their people safe. Workers across industries must figure out how they can adapt to rapidly changing conditions. Eventually, the onus is on the leaders to reskill and upskill their workforce to deliver new business models in the post-pandemic era.”
Ben Webb, CEO and founder of Voloco said: “Having seen record growth of 21.8% for June 2020 and 17.2% for July 2020, it is perhaps unsurprising that this has slowed to 3.0% for August 2020. Although actual output is still 10.8% beneath the pre-COVID-19 pandemic level in February 2020, it is still good news for construction, and an indicator of how the industry had adapted to the changing environment that we all face in the workplace.
It is important to remember that what we are seeing is the impact of lockdown restrictions easing and government assistance and support schemes stimulating activity, not an actual boom. We are still in for a bumpy ride and only those that continue to adapt will survive and thrive as the various schemes to support employment and business reduce / end over the coming months.”
Marco Verdonkschot, Managing Director at IronmongeryDirect, the UK’s largest supplier of specialist ironmongery, has commented on the latest growth of the UK construction industry during the pandemic: “The construction industry is continuing its recovery from the damage caused by the pandemic. In August, construction output increased by 3%, marking the fourth successive month of growth for the industry. This record growth has been driven by increases in both new work and repair and maintenance.
“The continued growth in new work is a positive sign and indicates that confidence is returning to the industry as more and more work is commissioned. New private housing in particular has continued to be a strong sector and is one of the key driving figures for the overall recovery of the entire construction industry.
“Unfortunately, while output does continue to increase, the rate of recovery has begun to slow down. The figure rose by 17.2% in July, compared to just 3% in August, and construction output is still 10.8% lower than it was in February.
“This is to be expected due to the fact that the UK economy as a whole is in recession. However, the fact that the construction sector continues to grow at all, driven by new work, is positive for the overall health of the industry, and means that we can be hopeful of a swift return to normal.
“The sector is proving to be incredibly resilient and is rebounding after a period of great difficulty with record growth. Hopefully this recovery will place the industry in a strong position and prevent widespread redundancies as the furlough scheme draws to a close.”
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