Construction output bounces back to pre-pandemic levels

The third quarter of 2020 has seen the construction industry roar back with record levels of growth, mainly driven by private housing.

Monthly output increased by 2.9% in September 2020 when compared against the performance a month earlier. Economically, this meant the figure for output rose to £12,938 million, the highest level of output since March 2020.

Construction output as a whole grew by a mighty 41.7% for Q3 compared to the record quarterly decline of 35.7% in Q2. The growth is the largest since records began back in 1997 and is substantially larger than the previous record of growth of 4.9% in Q2 2010.

All three months in Q3 saw month-on-month growth for the first time since Q2 2018, however, the rate of monthly growth did slow throughout the quarter as output grew by 17.4% in July followed by 3.8% in August.

September 2020 was the fifth consecutive month of growth and this was driven by all sectors apart from public housing and other related work. Only private new housing and infrastructure have recovered to levels above what they achieved in February 2020. Public new housing is the furthest below the other sectors for February 2020 levels as it sits at 29.4%.

There has been a continued return to activity across the construction sector in September 2020 but health and safety measures like social distancing have meant that capacity and level of work are not currently operating at the same level prior to the restrictions placed upon us during lockdown.

Andy Sommerville, Director of Search Acumen, said that the higher Stamp Duty threshold has lead construction firms to increase housing supply in response to high demand from their prospective buyers. Developers may focus on building outside of cities due to the increase in people working from home, city centre properties are becoming less desirable for this reason and could lead to more construction activity in satellite towns and the North of England.

In terms of workforce, the construction industry had a lower proportion of their staff on furlough when compared to all other industries according to the Business Impact of Coronavirus Survey carried out by BICS. The data, relating to the period between 7th-20th September 2020, shows that construction industry respondents had 71% of their workforce at their normal place of work compared with the 55% average for all industries.