Largest Construction Output Fall Ever Recorded in April

CONSTRUCTION OUTPUT FELL by 40.1% in April 2020 compared with March 2020, falling to £7,615 million. This is the largest monthly fall in growth since records began in January 2010.

The decrease in new work (41.2%) in April 2020 was because of record falls in all new work sectors. Private new housing and private commercial were the largest contributors to the reduction, at 59.2% and 39.7% respectively.

The repair and maintenance sector also didn’t escape the impact of lockdown with a 38.1% decline in April 2020. The largest contributor was private housing repair and maintenance where output fell by over half (54.3%).

For the quarter, construction output fell by a record 18.2% in the three months to April 2020, compared with the previous three-month period.

Comparison with other industries

The large monthly decreases in April 2020 are corroborated by evidence from the Business Impact of Coronavirus (COVID-19) Survey (BICS). During the first two weeks of April, construction businesses were far more likely to respond that turnover fell by more than half, and were less likely to respond that their financial performance was unaffected, than all industries as a whole.

Comment

Brian Berry, Chief Executive of the Federation of Master Builders (FMB)

Brian Berry, Chief Executive of the FMB, said, “Construction output has plummeted during the lockdown. Restrictions on the housing market lead to a significant drop in private new housing in April. The fact that 1 in 3 small to medium-sized (SME) house builders left the sector in 2008 demonstrates the acute need to support them over the next six months.

“Having a housing sector which includes an army of SME builders will help to ensure it is more resilient, diverse and of a high quality as we reshape and re-imagine the sector. We must do this in order to build the homes we need as the country recovers from the coronavirus.

“The Government must look at how they can ease the structural barriers that SMEs face when it comes to bringing forward new homes. The FMB is calling for a more manageable planning system, and greater availability of affordable land for small scale development. These are two areas which could make all the difference in terms of having a more sustainable housing market.”

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

Clive Docwra, Managing Director of McBains.

“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 be 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.”