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Construction output continues recovery

11 September 2020
Source: Office for National Statistics – Construction output in Great Britain

Construction output continued its recovery in July with a 17.6% month-on-month increase, according to the latest government figures.

The rise was on top of 23.6% growth in June and 7.6% in May, after a record fall of 40.2% in April.

But the sector’s output remains 11.6% lower than it was in February this year, before the full force of the coronavirus pandemic hit the industry.

On a rolling three-month basis, the construction sector shrank by 10.6% in July, following a record 35% decline in June. The largest contributors to the fall were private new housing and private housing repair and maintenance, which fell by 17% and 17.9% respectively, according to the Office for National Statistics.

Commenting on the figures, Fraser Johns, finance director at Beard, said: “In a sense there was really only one way these figures could go starting from such a low base back at the start of Q2, when we saw a 40.2% drop in GDP. But continued growth at this rate for the third consecutive month has to be a good thing.

“However it is interesting to note that across the sectors, and therefore the economy as a whole, the rate of recovery is not as strong as it was in June with construction growing at 17.6% compared to 23.6% previously. This is likely to be down to a number of factors but would reflect what we’re seeing on the ground.

“We face a challenging 12 months ahead based on continued uncertainty in the economy, and the affect this is having on getting project decisions over the line.

“So while it’s welcome to see overall GDP grow by 6.6%, a return back to pre-pandemic levels simply cannot come quickly enough.”

Clive Docwra, managing director of construction consulting and design agency McBains, added: “Today’s figures will be welcomed by the construction sector as a sign of its continuing recovery, but in reality they need to be viewed in the context of an industry that experienced a record 40% drop in output at the height of the lockdown.

“Construction is still a long way from being out of the woods and the upturn is extremely fragile, reflected by the fact the figures show that new work decreased by 9.7% in the three months to July 2020, with private new housing work alone falling by 17.0%.

“The big concern for the industry is if there’s a second spike and a further lockdown. The government needs to do all it can to ensure the sector maintains its recovery.”

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