Construction output sees largest decline since 2009
Construction output fell by 12.5% in 2020 which is the greatest decline since 2009, according to the Office for National Statistics (ONS).
On a monthly basis, construction output fell by 2.9% in December 2020, which was attributed to a 3.8% decline in new work and a 1.5% fall in repair and maintenance.
This decline represents the first monthly fall in construction output since April 2020.
As a result of this decline, the December 2020 level of output is 3.5% below the pre-coronavirus February 2020 level.
Looking at the data on a quarterly basis, construction output grew by 4.6% in Q4, this was accountable to a 4% rise in new work, and a 5.5% uplift in repair and maintenance.
The quarterly rise in new work was due to growth in all new work sectors, apart from private commercial, which decreased by 1.6%.
Meanwhile, the increase in repair and maintenance in Q4 was because of growth in all repair and maintenance sectors.
Furthermore, new orders fell by 8.8%, equating to £962m, in Q4.
This contrasts to the record quarterly growth seen in Q3, which saw new orders rise by 71.8%.
Gareth Belsham, director of Naismiths, said: “Economic gravity has finally caught up with the UK’s construction sector, which at times last year appeared to be in a boom while other industries were in a bust.
“December’s fall in output is a drop in the ocean compared to the eye-watering 40% contraction suffered last April.
“Nevertheless the slowdown matters because it has undone some of the great progress made over the summer and autumn.
“Across 2020 as a whole, output shrank by 12.5%, its worst performance since the collapse of 2009.
“Of course these things are relative – the UK economy as a whole shrank by almost 10% in 2020, its largest annual contraction on record.
“But December’s slowdown means that construction ended 2020 with monthly output 3.5% smaller than its pre-pandemic level, and this is calling into question the sense of construction’s exceptionalism.
“After months of optimism and strong demand, new orders across the industry slowed in the final quarter of the year.
“Things were more upbeat for housebuilders – who saw new orders for private sector homes jump by 6% compared to the previous quarter.
“The net effect of this data is to give the industry a reality check.
“While construction’s recovery is happening much quicker than the painfully slow return to growth seen after the global financial crisis, progress is still fragile and the breathless rate of growth seen last summer is unlikely to return.”