Record Growth in Construction Output in June 2020

MONTHLY CONSTRUCTION OUTPUT grew by a record 23.5% in June 2020, substantially higher than the previous record monthly growth of 7.6% in May 2020.

However, despite this strong monthly growth, construction output in June 2020 remains comparatively low at 24.8% below the February 2020 level, which was before the full impact of the coronavirus (COVID-19) pandemic.

The quarterly construction output figures are still showing the full impact of the lockdown, falling by a record 35.0% in Quarter 2 (Apr to June) 2020 compared with Quarter 1 (Jan to Mar) 2020.

This quarterly fall was driven by record falls of 35.2% in new work and 34.7% in repair and maintenance.

The decrease in new work (35.2%) in Quarter 2 2020 was because of record quarterly falls in almost every new work sector. The largest contributor was private new housing, which fell by 51.2% in Quarter 2 2020 compared with Quarter 1 2020.

The decrease in repair and maintenance (34.7%) in Quarter 2 2020 was because of record falls in all repair and maintenance sectors. Again, the largest contributor was private housing repair and maintenance, which fell by 46.5% in Quarter 2 2020 compared with Quarter 1 2020.

New orders, as could be expected, decreased by a record 51.1% in Quarter 2 2020 compared with Quarter 1 2020. The drop was shown in record falls of both all other work and new housing, which declined by 51.9% and 49.0% respectively.

In the lowest level of new orders since records began in 1964, the value of new orders in Quarter 2 2020 was £6,173 million.

The annual rate of construction output price growth was flat (0.0%) in June 2020 – the lowest rate of growth since records began in 2015.

Response

Recession

Charlie Carlton, Head of Digital at IronmongeryDirect comments: “The UK has now officially, and inevitably, entered a recession, with the economy shrinking by 20.4% between April and June, compared to the first three months of 2020.

“The construction industry has been hit hard by the pandemic, with the lockdown causing output to plummet since March. In April, it fell by a staggering 40.2% – the highest monthly fall since such records began in 2010.

“However, while construction output remains around a quarter (24.8%) lower than it was pre-lockdown, there are certainly signs of recovery. The latest figures from the Office for National Statistics show that output increased by 23.5% between May and June, which was also a record.

“The sectors which grew the most were repairs and maintenance of private housing (44%) and the building of private new houses (42.3%).

“In other more positive news, the number of unemployed construction workers dropped by 3,000 in the months between April to June (compared with March to May), and this was joined by a rise in average weekly earnings, from £578 up to £590. While this is 9% lower than the equivalent period last year, it is the first increase in 2020, so hopefully it will continue to rise.

“The slow, but visible signs of recovery are also evident in our sales figures, as IronmongeryDirect saw record numbers for both orders and revenue in June. We experienced an 80% year-on-year increase in web traffic and a 75% rise in transactions.

“While there is undoubtedly still a long way to go before the construction industry fully recovers, it’s great to see that there are a few signs of progress after an incredibly challenging few months. While we are about to hit a hard time as a nation, there can be hope that we’ll recover in full force.”