Chartered Institute of Building Magazine of the Chartered Institute of Building

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Construction output plummets by record 40% in April

12 June 2020

Construction output plummeted by a record 40% in April as a result of the coronavirus lockdown, official figures show.

The Office for National Statistics has revealed that output dropped by 18.2% in the three months from February to April, compared to the three months before, driven by a 28.3% drop in private housing and a 19.6% fall in private commercial work.

The month-on-month decline of 40.1% in April followed a 5.9% drop in March. The April drop – the largest fall out of all the main sectors of the economy – was driven by declines in all types of work, with the biggest contribution coming from private housing, which fell by 59.2%.

Commenting on the figures Fraser Johns, finance director of contractor Beard, said: “Recovering from this sort of setback will be no simple matter.

“The clear steer from government that the construction sector should get back to work, coupled with the strong guidance from the Construction Leadership Council in terms of how to achieve that safely, means that the industry is in a good position to recover quickly. Recent PMI data has suggested that this is already beginning to happen.

“Beard has been able to keep more than 90% of sites operational throughout the crisis, and now has 100% up and running. One recent report has indicated that 97% of sites industry-wide are now operational again. This is hugely encouraging.

“As firms adapt to the new circumstances in which we all find ourselves operating, we now need to continue to find ways of delivering more efficiently. The crisis gives us all an opportunity to improve ways of working and modernise outdated practices, so that ultimately the industry may emerge stronger from the crisis.”

Clive Docwra, managing director of  consulting and design agency McBains, added: “Today’s figures are further confirmation that the construction sector will face a hugely tough time to recover from the coronavirus pandemic.

“Particular concerns are private new housing work seeing a third consecutive month of large decline, exacerbated by the Covid-19 lockdown on April and now at its lowest level for a decade – bad news for the industry but also for prospective homeowners given the housing shortage. The record fall in private commercial new work also reflects the pause button being pressed on major projects.

“Hopefully today’s figures will represent the nadir given they cover the full month of lockdown, but while many large construction firms are now resuming work, many will still weakened by reduced order pipelines over the next few months.

“Firms are also experiencing labour shortages, supply chains are still operating extremely slowly and cashflow is becoming an increasingly pressing issue as cash reserves dry up.  The government needs to stimulate demand, for example through reducing VAT on repair and maintenance work.”