Construction output continues recovery

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.”