February’s Construction Output Shows Highest Rise in Past Six Months

Construction output graph - Construction Output February

IN THE LATEST figures from the Office for National Statistics, construction output grew by 1.6% (£213 million) in February 2021.

February’s output was £13,319 million – the highest monthly growth since September 2020.

This return to growth follows no growth in January 2021 because ONS revised the data downwards by 0.9 percentage points from its first estimate.

Despite February 2021’s gains, the level of output in the month was 4.3% (£598 million) below its February 2020 pre-pandemic level.

New Work

The monthly increase in new work (1.5%) in February 2021 was because of growth in all new work sectors apart from infrastructure, which fell by 3.4%.

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

The monthly increase in repair and maintenance (1.9%) 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.

Quarterly Figures

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.

Following revisions by the ONS, 2020 annual construction growth has been revised down 1.5 percentage points to an annual decline of 14.0%, making it the largest decline in annual figures since records began in 1997.

COMMENTARY

Glass Half Full

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Clive Docwra MD of McBains

Clive Docwra, Managing Director of property and construction consultancy McBains, said: “Today’s figures are another sign that construction industry is maintaining its recovery.  Confidence is still fragile in some work sectors, but there’s a definite feeling of the glass being half full, rather than half empty.

“Especially cheering is the growth in private commercial new work, which grew by 4%, suggesting that order books are beginning to be filled on a more regular basis.  Projects in many sectors have been paused while lockdown measures have been in place, but the lifting this week of restrictions in retail, hospitality and leisure will hopefully also kick-start investment.

“Recovery will be a long haul however, as output still remains more than 4% below pre-pandemic levels. One factor that could further affect the recovery are reports of materials shortages.  Cement, timber and steel are already in short supply, and where products like these are imported from countries experiencing surges in COVID cases, it’s having a particular impact.”

Head and Shoulders Above All Other Sectors

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Gareth Belsham National Head of Building Consultancy, Naismiths

Gareth Belsham, director of property consultancy and surveyors 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 how 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.”

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