With the UK now confirmed to be in recession, the latest ONS figures for Q2 2020 reveal the construction sector has suffered “by far the largest decline in quarterly growth since quarterly records began in Quarter 1 1997”.
Quarterly construction output fell by a record 35.0% in Quarter 2 (Apr to June) 2020 compared with Quarter 1 (Jan to Mar) 2020, and this 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 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 largest contributor to the decrease in repair and maintenance was private housing RMI, which fell by 46.5% in Quarter 2 2020 compared with Quarter 1 2020.
On a month-by-month basis, construction output grew by a record 23.5% in June — a figure substantially higher than the previous record monthly growth of 7.6% in May 2020. However, despite this strong monthly growth, construction output in June remained comparatively low at 24.8% below the February 2020 level, which was before the full impact of the coronavirus (Covid-19) pandemic.
Overall, the fall in Quarter 2 2020 is reported by ONS as being “by far the largest decline in quarterly growth since quarterly records began in Quarter 1 1997 — and nearly five times larger than the previous record quarterly fall in Quarter 3 2009.”
The biggest falls recorded previously were:
| Quarter 1 2009 | -7.1% | During the 2008 and 2009 economic downturn |
|---|---|---|
| Quarter 4 2008 | -5.9% | During the 2008 and 2009 economic downturn |
| Quarter 1 2012 | -4.3% | Adverse weather conditions |
| Quarter 2 2012 | -2.9% | Queen’s Diamond Jubilee (extra Bank Holiday) and unseasonal weather |
Commenting on the figures, Brian Berry, Chief Executive of the Federation of Master Builders (FMB), said: “The Government must use the forthcoming Budget to invest in our housing stock, both new builds and improving our existing buildings. This will support recovery in the construction industry and create jobs.
“Construction output plummeted during the coronavirus lockdown, contributing to the UK officially entering a historic recession during the second quarter of this year. While we know that the industry is slowly recovering, output is struggling to regain pre-coronavirus levels.
“The Government must prioritise bringing forward planning reforms and investing in local authority planning departments to help house builders start building out new sites swiftly. Investment in construction apprenticeships is also important, as this will create jobs for young people in a sector that has historically struggled with skills shortages.”
Brian concluded: “Investing in our existing buildings offers opportunities for communities across the UK, and is labour-intensive work. I’m calling for an ambitious national energy efficiency retrofit strategy that builds on the Green Homes Grants scheme, to give long-term confidence in this growing market and to achieve the scale of change that’s needed. In conclusion, construction recovery must have local builders at its heart. These small firms employ local people, compete on reputation by delivering high quality work, and train the majority of apprentices in the industry.”
