Construction Output Falls to Historic Low in April

Construction Output Falls to Historic Low in April

Construction output decreased by 40.1% in April, the largest month-on-month drop in growth since records began in January 2010, it has been announced. 

Data from the Office for National Statistics (ONS) published on Friday revealed the historic impact of the Covid-19 upon the construction sector and the UK economy as a whole. 

In total, the UK economy shrunk by 20.4%, a contraction three times greater than the decline experienced during the financial crisis in 2008-09, but the situation is starker for construction.

New construction work accounts for roughly two-thirds of all building work, and this fell by 41.2% in April. Private housing (work commissioned by individuals) suffered the biggest slump of 59.2%, while developer homes decreased by 39.7%.

Repair and maintenance work dropped 38.1%, which accounts for approximately one third of all building work. 

April is The Low Point

While the findings paint a grim picture for construction, the ONS hypothesises that building work and total economic activity is now likely to have picked up after the government eased lockdown restrictions in May. 

“It’s highly likely April will be the low point,” said Jonathan Athow, deputy national statistician for economic statistics at the ONS.

“Our own surveys and wider indicators have suggested a pick-up in economic activity, but I think it’s really too early to know how quickly economic activity will recover in the coming months.”

Earlier this month the new UK Construction Total Activity Index revealed that construction activity increased in May, although the sector remains mired in a slowdown. 

Over a third of construction companies have seen their incomes drop by at least 50% during the coronavirus pandemic, and 35% of firms report having less than three months’ cash reserves due to the pandemic lockdown. 

However, over two-thirds of builders have now restarted work, according to the Federation of Master Builders (FMB), and with builders merchants reopening following lockdown, building work is set to resume on projects across the country.

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