New Construction Output Figures Show Largest Monthly Fall on Record: Industry Comment

Clive Docwra, Managing Director of leading construction consulting and design agency McBains, said:

“Today’s figures confirm the construction industry is facing its most challenging period since the 2008 financial crisis.

“The industry was more affected by the lockdown than most as the majority of work cannot be undertaken from home, meaning the pandemic has contributed to new work decreasing by 6.2%, including private housing falling by 6.4% and private commercial work plunging by 7.1%.

“What’s more, the worst is yet to come with the impact of coronavirus yet to be fully seen.

“While the Prime Minister has identified the industry as one that can now return, construction work cannot just simply pick up again because many supply chains – not only in the UK but also in the Far East – are still static as a result of the pandemic.

“The industry is also facing short-term labour shortages because many foreign construction workers that returned home as coronavirus took hold are reluctant to return given the impending Brexit. And there are challenges in firms operating while maintaining social distancing.

“Many small businesses in the sector are facing continuing pressure on their finances from the current suspension of projects, so the coronavirus loan process needs to be streamlined and faster decisions need to be made on loan approvals too.”

The new construction output figures published today show:

• Construction output fell by 5.9% in the month-on-month all work series in March 2020; this was driven by a 6.2% decrease in new work and a 5.1% decrease in repair and maintenance; all of these decreases were the largest monthly falls on record since the monthly records began in January 2010.
• Anecdotal evidence received from across the industry suggested the coronavirus (COVID-19) pandemic was a significant factor to these large falls as construction activity ceased or reduced significantly in March 2020; the Office for National Statistics (ONS) has released a public statement on the coronavirus and the production of statistics.
• The decrease in new work (6.2%) in March 2020 was because of falls in all new work sectors; private new housing and private commercial were the largest contributors, falling by 6.4% and 7.1% respectively.
• The decrease in repair and maintenance (5.1%) in March 2020 was because of falls in all repair and maintenance sectors; the largest contributor was private housing repair and maintenance, which fell by 8.6%, the largest month-on-month fall on record.
• Construction output fell by 2.6% in Quarter 1 (Jan to Mar) 2020, compared with Quarter 4 (Oct to Dec) 2019; this was driven by a 2.1% decrease in new work and a 3.5% decrease in repair and maintenance.
• New orders grew by 11.8% in Quarter 1 2020 compared with Quarter 4 2019; this rise was because of increases in both all other work and new housing, which rose 11.5% and 12.5% respectively.