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Record construction output growth in June but new orders falter

12 August 2020

Construction output grew by a record 23.5% in June 2020, higher than the 7.6% growth recorded in May 2020.

But output was still 24.8% below the February 2020 level, before the full impact of the coronavirus pandemic.

Construction output in Q2 2020 (April to June) was down a record 35%, which is the largest drop since quarterly records began in Q1 1997 and nearly five times larger than the previous record quarterly fall in Q3 2009.

Meanwhile, new work has dropped sharply, down 35.2% in the second quarter of 2020 because of record quarterly falls in almost all sectors of new work. The largest contributor to the decline was private housing, which fell by 51.2% in Q2 2020, compared with Q1 2020.

New orders fell by a record 51.1% in Q2 2020 as compared to Q1 2020, due to record falls in both all other work and new housing, which fell by 51.9% and 49% respectively.

Commenting on the figures, Fraser Johns, finance director at Beard, said: “It should come as no surprise that Q2 has been a very difficult one for the construction sector, as well as for the economy as a whole.

“While undoubtedly welcome, a second consecutive month of rapid growth, with output in June up 23.5% compared to May, cannot obscure the low base from which that starts. Over Q2 as a whole, output has fallen by more than a third (35%) and remains down by about a quarter (24.8%) on its pre-coronavirus levels in February.

“The construction industry needs to focus on delivering for its customers and demonstrating the value high-quality building can bring. But to get back on its feet, the industry needs new work. Sadly, the Office of National Statistics (ONS) figures also show orders falling by more than half (51.1%) in Q2 and they are now at the lowest level since records began more than half a century ago.

“As the economy recovers and investor confidence returns, this will no doubt improve. This cannot come soon enough, however, and the government’s ‘build, build, build’ message remains a vital one.”

Construction Products Association (CPA) economics director Noble Francis added that the major falls in output were “clearly” in March and April while the country was in a full lockdown. Since then, output has improved. But he warned that the ONS has a low response rate to its survey, likely due to staff being furloughed and companies shutting down temporarily, so the figures were likely to suffer from “survivor bias” from the period of March to date.