Over a third of construction companies have seen their incomes drop by at least 50% during the coronavirus pandemic, new research shows.
Economic data from the Office for National Statistics (ONS) has revealed the economic impact of Covid-19 on the construction sector, with the latest data covering the two weeks to 17 May.
Only the arts, entertainment and recreation and accommodation and food service sectors have been hit worse than the construction section, ONS reports.
The Business Impact of Coronavirus Survey was sent out in the first weeks of May, and received responses from just over 1,700 construction firms.
Around 40% of building companies said their revenues have decreased by 50% or more, and 35% of firms report having less than three months’ cash reserves due to the pandemic lockdown.
Meanwhile, roughly one in 20 of these firms (5.2%) reported they were in serious financial jeopardy with less than one month’s cash reserves remaining.
Construction firms have been faced with site closures and having to furlough or even lay off staff in the past few months. Around 48% of construction companies have furloughed staff, the highest percentage out of all sectors.
At the time of the survey being sent out, 20% of firms surveyed had halted trading, while an average of 42% of staff were on furlough. But since then, more staff have returned to work as sites reopen.
This could explain why 35% of construction businesses which had paused trading reported they were expecting to resume work within the next two weeks.
The pandemic has caused severe financial problems across the homebuilding industry, but construction workers returning to work last month and building suppliers reopening their doors as lockdown eases are positive signs.
Noble Francis, chief economist at the Construction Products Association, is wary however that the outlook remains decidedly uncertain for the industry.
“Clearly the proportion of staff on furlough will fall as sites reopen but what we don’t know is what happens after the initial flurry of activity to complete halted projects, given the fall in demand and new orders since Covid-19.”