ONS: Construction levels fell to lowest on record in 2020

Annual construction growth last year has been revised down 1.5% to show an annual decline of 14.0%, according to ONS construction output figures.

This decline follows revisions in the release and now represents the largest decline in annual growth since annual records began in 1997.

On a monthly basis, construction output grew by 1.6% in the all work series in February 2021.

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This rise is due to a 1.5% increase in new work and 1.9% increase in repair and maintenance; this was the highest monthly growth in all work since September 2020 when it grew by 1.8%.

The level of construction output in February 2021 was 4.3% below the February 2020 level and new work was 7.8% below the February 2020.

Meanwhile, level and repair and maintenance work was 2.2% above the February 2020 level.

The data shows that the monthly increase in new work in February 2021 was because of growth in all new work sectors apart from infrastructure, which fell by 3.4%.

The largest contributor to this growth was private commercial new work, which grew by 4.0%.

The monthly increase in repair and maintenance in February 2021 was because of growth in private and non-housing repair and maintenance, which grew by 4.7% and 2.6% respectively, offsetting the 8.6% fall in public housing repair and maintenance.

Construction output fell by 1.0% in the three months to February 2021 compared with the previous three-month period, because of a 1.6% fall in new work and 0.1% fall in repair and maintenance.

Gareth Belsham, director of Naismiths, said: “Not even the downward revision of January’s figure could take the shine off another strong month of growth for Britain’s builders.

“The construction industry still stands head and shoulders above all other sectors as the fastest growing part of the economy.

“A 1.6% monthly jump in output would be impressive at any time. But coming in the middle of a nationwide lockdown, it shows just how well the industry has managed to adapt to social distancing rules and speaks of the deep reserves of pent-up demand.

“Dig into the data and you can see just out hot parts of the industry are now running.

“Output among private sector housebuilders has surged by nearly 141% since its low point of 12 months ago, and infrastructure work has long since soared past its pre-pandemic level.

“With many housebuilders reporting full orderbooks and buoyant sentiment, the question now is whether yesterday’s scenes of shoppers returning to the high street will help retail construction pick itself up off the floor to join the party.

“Strong progress across the industry as a whole is creating growing pains, with materials prices surging as the supply chain struggles to keep up with demand.

“The government’s statisticians have confirmed that 2020 was the worst year on record for UK construction.

“Grim though that milestone is, it’s starting to feel increasingly distant as contractors and their suppliers gear up for a sustained surge of demand in 2021.”

Fraser Johns, finance director at Beard, added: “There is a lot of optimism around this week, and rightly so with the reopening of our retail sector and a successful vaccine rollout.

“The highest level of growth month-on-month since September at 1.6% certainly provides hope that we are heading in the right direction in terms of a roadmap out of the crisis.

“And compared to the rate of growth of the economy overall at 0.4%, the construction sector has performed well.

“However, in the three months to February output actually fell by 1% and the month was 4.3% down on the same point last year.

“We also had the warning from the Construction Leadership Council last week that shortages of building products and materials are set to get worse before they get better.

“So, while the rate of growth we see from today’s figures provides a welcome shot in the arm for the construction industry, it’s more important than ever to ensure good relationships with suppliers, including adherence to the prompt payment code. This will help to create the solid foundations needed for growth this year.”