Construction output dropped by 5.9% in the month-on-month all work series in March 2020, as the impact of Covid-19 takes hold of the construction industry
New work decreased by 6.2%, while repair and maintenance work fell by 5.1%, according to the latest construction output figures by the ONS.
Anecdotal evidence received from across the industry suggested the Covid-19 pandemic was a significant factor to these large falls as construction activity ceased or reduced significantly in March 2020.
The fall in new work in March 2020 was due to a decrease in all new work sectors – private new housing and private commercial were the largest contributors, falling by 6.4% and 7.1% respectively.
The decrease in repair and maintenance was thanks to reductions in all repair and maintenance sectors – the largest contributor was private housing repair and maintenance, which fell by 8.6%, the largest month-on-month fall on record.
Construction output fell by 2.6% in Q1 2020, compared with Q4 2019. This drop was driven by a 2.1% decrease in new work and a 3.5% decrease in repair and maintenance.
Despite these glum figures, new orders grew by 11.8%, mainly thanks to increases in both all other work and new housing, which rose 11.5% and 12.5% respectively.
Coronavirus impact yet to be fully seen
Clive Docwra, managing director of McBains, commented: “Today’s [13 May] figures confirm the construction industry is facing its most challenging period since the 2008 financial crisis.
“The industry was more affected by the lockdown than most as the majority of work cannot be undertaken from home, meaning the pandemic has contributed to new work decreasing by 6.2%, including private housing falling by 6.4% and private commercial work plunging by 7.1%.
“What’s more, the worst is yet to come with the impact of coronavirus yet to be fully seen.
“While the Prime Minister has identified the industry as one that can now return, construction work cannot just simply pick up again because many supply chains – not only in the UK but also in the Far East – are still static as a result of the pandemic.
“The industry is also facing short-term labour shortages because many foreign construction workers that returned home as coronavirus took hold are reluctant to return given the impending Brexit. And there are challenges in firms operating while maintaining social distancing.
“Many small businesses in the sector are facing continuing pressure on their finances from the current suspension of projects, so the coronavirus loan process needs to be streamlined and faster decisions need to be made on loan approvals too.”