The level of construction output in October 2020 was 6.4% below that recorded in February 2020

The level of construction output in October 2020 was 6.4% below that recorded in February 2020

January 2021

According to the most recent ONS report, construction output in Great Britain grew by 1.0% in October 2020, due to increases in new work (0.3%), and repair and maintenance (2.3%).

The latest report from the Office for National Statistics (ONS) signaled three-month on three-month construction growth in October 2020.

Monthly construction output increased by 1.0% in October 2020 compared with September 2020, rising to £13,066 million.  This was due to increases in all sectors, apart from private new housing, and private commercial new work.  There were  increases in both new work (0.3%), and repair and maintenance (2.3%).

 The growth in October 2020 is the sixth consecutive month of growth since the record monthly decline of 41.2% in April 202, but is the smallest monthly increase in this six-month period.

Construction output grew by 24.9% in the three months to October 2020 compared with the previous three-month period, because of growth in both new work (23.8%), and repair and maintenance (26.8%).

However, output in the all work construction output series in October 2020 remains 6.4% (£898 million) below the February 2020 level, before the full impact of the Coronavirus pandemic, with only infrastructure having recovered above the pre-lockdown level of output.

The mixed profile of the decline and recovery to date is noteworthy.  For example, housing (both new, and repair and maintenance, in both private and public) saw a large decline in March and April 2020 and has seen a strong bounce back since.

In contrast, other types of work, such as infrastructure and public other new work, saw a comparatively smaller fall in March and April 2020, and have registered relatively smaller growths since.

Despite month-on-month and three-month on three-month growth, the level of output remains lower in October 2020 in the month-on-year and three-month on year measures, with the exception of infrastructure. This reflects the impact of the coronavirus (COVID-19) pandemic since February 2020.

Construction output can be broken down by different types of work. These are categorised into all new work, and repair and maintenance. All new work accounts for approximately two-thirds of all work, while repair and maintenance accounts for approximately one-third of all work.

There was growth in both new work, and repair and maintenance in October 2020, with stronger growth in repair and maintenance. However, both still remain below their pre-pandemic February 2020 level, with new work 8.2% below and repair and maintenance 3.1% below.  So, as the chart (below left) shows, the level of repair and maintenance output in October 2020 was closer to its February 2020 pre-pandemic level of output than new work.

As noted earlier, all sectors saw monthly growth in October 2020, except for private new housing and private commercial new work

New work grew by 0.3% (£23 million) in October 2020 compared with September 2020. This was because of increases in most new work sectors, the largest of which was public other new work, which grew by 7.5% (£54 million).

In comparison, private new housing and private commercial new work were the only two sectors to decline in October 2020, falling by 1.9% (£56 million) and 1.5% (£30 million) respectively.

The chart on page 18 shows the level of construction output in new work sectors since February 2020. Infrastructure output recovered to its pre-lockdown February 2020 level in August 2020 and has remained above this level since. The decline in April 2020 in this sector was relatively less sharp than other sectors, and likely to have been because of larger sites remaining partially open as social distancing measures were implemented more easily.

Elsewhere, private new housing, which recovered above its February 2020 level in September 2020, returned below this level following the monthly fall of 1.9% (£56 million) in October 2020.

In contrast, all other new work sectors remain below their February 2020 level with growth broadly flat in recent periods.

Infrastructure was the only new work sector where output was above its February 2020 level in October 2020

Repair and maintenance grew by 2.3% (£105 million) in October 2020 because of increases in all repair and maintenance sectors.

The largest contributor was non-housing repair and maintenance, which grew by 2.3% (£53 million).  Elsewhere, public housing repair and maintenance grew by 5.1% (£33 million) with private housing repair and maintenance growing by 1.2% (£20 million).

Despite this, output in every repair and maintenance sector in October 2020 remains below the pre-lockdown February 2020 level.

Business Impact of Coronavirus Survey
Qualitative information sourced from the Business Impact of Coronavirus (COVID-19) Survey (BICS) was used to quality assure response the ONS received for the Monthly Business Survey for construction and allied trades (MBS) for October 2020.

Health and safety measures such as social distancing, where businesses are working on premises and sites, continue to reduce capacity and level of work, with anecdotal information in October 2020 also suggesting the level of work available has reduced compared with prior to the coronavirus pandemic.

The fortnightly net balance turnover estimates from the BICS, broadly reflect the published construction output all work estimates. Both suggest a slowing of construction output growth in the most recent periods to October 2020.

Evidence from this survey shows that construction industry respondents had a lower proportion of their workforce on partial or furlough leave than the average for all industries.  BICS Wave 17 data, which relate to the period 19th October to 1st November 2020, show that construction industry respondents had 2.3% of their workforce on partial or furlough leave compared with the 9.0% average for all industries, as shown in Table 3.

Three-month figures
Construction output grew by 24.9% (£7,677 million) in the three months to October 2020 compared with the previous three-month period, due to increases in every sector. This is the second consecutive period in the three-month on three-month series where every sector has seen growth.  However, all sectors have slowed as the record declines in April 2020 move out from the base period.

New work grew by 23.8% (£4,775 million) in the three months to October 2020 because of increases in all new work sectors. The largest contributor to this three-month on three-month growth was private new housing, which grew by 48.0% (£2,857 million).

Repair and maintenance grew by 26.8% (£2,902 million) in the three months to October 2020, driven by growth in all repair and maintenance sectors. Private housing repair and maintenance was the largest contributor to this increase, growing by 40.0% (£1,413 million). Elsewhere, non-housing, and public housing repair and maintenance grew by 14.2% (£859 million) and 51.1% (£631 million) respectively.

The coronavirus (COVID-19) pandemic presents a significant challenge to the UK, and the Office for National Statistics (ONS) is working to ensure that the UK has the vital information needed to respond to the impact of this pandemic on our economy and society. This means we will need to ensure that information is provided faster, using new data sources and changing how our surveys operate, to ensure we provide the information necessary as the situation unfolds.

Comment by Naismiths
Construction may have surrendered its crown as the fastest-growing sector of the economy, but it is still making solid progress,”,” says Gareth Belsham, Director of the national property consultancy and surveyors Naismiths.

“After six straight months of expansion, in October it was once again a £13bn industry.  Yet the rate of growth is slowing badly. Output jumped by a quarter in the three months to the end of October, an impressive feat but well off the pace of the breakneck 41.7% growth recorded in the third quarter of the year.”

“The Government’s greenlighting of a series of infrastructure projects has propelled infrastructure output past its pre-Covid levels.”
“In all other subsectors of the industry the fightback for pre-pandemic parity continues. Despite the breathtaking 145% growth recorded by private sector housebuilders since April, their output in October was still £46m lower than it was in February.”

“As the wider economy stalled in October, private sector housebuilders also saw output slip into reverse, with a 1.9% month-on-month fall. Despite this setback, confidence is strong and order books for 2021 are impressively full.”

“But October’s wobble shows the recovery is far from complete and remains fragile. With UK builders heavily reliant on materials imported from the EU, the lack of progress in Britain’s trade negotiations with the European bloc is also a major worry.”

“There’s now a very real prospect that from 1st January, trade barriers will add cost and delays to the imports of certain crucial building materials.  The construction industry has seen the most white-knuckle fall and recovery of any sector during 2020, but it ends the year busy and optimistic – albeit with a recovery that is incomplete and far from irreversible.”

About: The monthly Construction Output Survey measures output from the construction industry in Great Britain. The survey samples 8,000 businesses employing over 100 people, or with an annual turnover of more than £60 million.  The survey’s results are used to produce non-seasonally and seasonally adjusted monthly, quarterly and annual estimates of output in the construction industry at current price and at chained volume measures.  Data on new orders supplied by Barbour ABI are used to model the breakdown of the overall output figures for Great Britain into the lower level and regional data seen in the report.

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