October Construction Output Growth Slowed to 1%

CONSTRUCTION OUTPUT increased by just 1.0% in October 2020, making it the sixth consecutive month of growth but the smallest monthly increase in that time.

According to the latest figures from the Office for National Statistics, October’s increases came from all sectors, apart from private new housing and private commercial new work.

The month’s figures mean the level of construction output in October 2020 was 6.4% below February 2020, with only infrastructure having recovered above this pre-lockdown point.

Quarterly growth

For the quarter, construction output grew by 24.9% in the three months to October 2020 compared with the previous three-month period, because of growth in both new work (23.8%) and repair and maintenance (26.8%).

Industry Comment

Construction surrenders its crown

Gareth Belsham, director of property consultancy and surveyors Naismiths, said, “Construction may have surrendered its crown as the fastest-growing sector of the economy, but it is still making solid progress.

“After six straight months of expansion, in October it was once again a £13bn industry.

“Yet the rate of growth is slowing badly. Output jumped by a quarter in the three months to the end of October, an impressive feat but well off the pace of the breakneck 41.7% growth recorded in the third quarter of the year.

“The Government’s greenlighting of a series of infrastructure projects has propelled infrastructure output past its pre-Covid levels.

“In all other subsectors of the industry the fightback for pre-pandemic parity continues. Despite the breathtaking 145% growth recorded by private sector housebuilders since April, their output in October was still £46m lower than it was in February.

“As the wider economy stalled in October, private sector housebuilders also saw output slip into reverse, with a 1.9% month-on-month fall. Despite this setback, confidence is strong and order books for 2021 are impressively full.

“But October’s wobble shows the recovery is far from complete and remains fragile. With UK builders heavily reliant on materials imported from the EU, the lack of progress in Britain’s trade negotiations with the European bloc is also a major worry.

“There’s now a very real prospect that from 1st January, trade barriers will add cost and delays to the imports of certain crucial building materials. The construction industry has seen the most white-knuckle fall and recovery of any sector during 2020, but it ends the year busy and optimistic – albeit with a recovery that is incomplete and far from irreversible.”