Monthly construction output swung back into growth in February after flatlining at the beginning of the year, according to the latest ONS data, however it has yet to hit pre-pandemic levels.
Monthly construction output grew by 1.6% in February 2021 compared with January 2021, rising to £13,319 million, and is the highest month-on-month growth since September 2020 when output grew by 1.8%.
This return to growth follows flat growth (0.0%) in January 2021, which has been revised down 0.9 percentage points from its first estimate. Despite this growth, the level of output in February 2021 was 4.3% (£598 million) below its February 2020 pre-pandemic level.
Andrew Shepherd, managing director, TopHat Solutions said: “It’s very good news that the construction output was up 1.6% in February 2021, but this is still considerably lower than this time last year. Given the shortage we face of both housing and workers in the construction industry, and in light of the government’s net zero targets, a shift towards faster and more sustainable methods of construction is essential.
“In order to grow the output swiftly the government must embrace a wider adoption of modular housing. By manufacturing homes offsite, TopHat is able to cut delivery times by half compared to traditional methods. Tophat’s homes are also a third more energy efficient.
“Traditional construction still accounts for over 90 percent of house building in the UK, and without further funding into alternative methods, the construction output is unlikely to grow at the rate we need it to.”
The monthly growth in all work construction output in February 2021 was driven by both new work, and repair and maintenance. This was the first time since September 2020 where both new work, and repair and maintenance saw monthly growth in the same month. While the level of repair and maintenance was 2.2% above its February 2020 pre-pandemic level in February 2021, new work output was 7.8% below its level.
New work grew by 1.5% (£123 million) in February 2021 compared with January 2021, because of increases in all new work sectors, except infrastructure, which fell by 3.4% (£66 million). The largest contributors to the monthly increase in new work were private commercial work, which grew by 4.0% (£75 million) and public new housing, which grew by 13.5% (£51 million), both of which were the highest monthly growths since July 2020. Despite the monthly increases both sectors are still considerably below their pre-pandemic levels.
Infrastructure output was the first to recover above its pre-pandemic February 2020 level in August 2020 and was the only sector to be above this level in February 2021.
On a quarterly basis, construction output fell by 1.0% (£407 million) in the three months to February 2021 compared with the previous three-month period because of declines across most sector. This is the first decline in all work in the three-month on three-month series since July 2020 when it fell 8.6% (£3,034 million).
Andy Sommerville, Director at Search Acumen, said: “This latest data shows construction continues to cement itself as one of the key contributing sectors powering the UK’s economic recovery.
“The rise in new housing construction work over the last month can be partly attributed to housebuilders ramping up work to complete projects that had their forecasted completion times extended due to ongoing restrictions on economic activity.
“Tailwinds emerging from the property market running hot as a result of the Stamp Duty holiday has likely improved confidence among housebuilders, prompting them to begin new projects.
“The medium outlook for the property market is less favourable compared to the last six months. The extension of the Stamp Duty holiday until 30 June is unlikely to provide the same degree of stimulus that the initial holiday provided, while possible rises in unemployment once Government support schemes are wound down may pare back consumer confidence. This is all likely to compound to put downward pressure on house prices, which would fuel greater reticence among housebuilders to maintain current supply volumes.
“To improve development decisions, greater investment in the digitisation of property information will help housebuilders identify risks up front. One example of a digital innovation developers could benefit from is our Line Search Before U Dig tool. The data that can be extracted from this tool could be used to help builders identify utility assets to make informed decisions, cutting down the risks and associated costs with damaging existing utility infrastructure. Providing key data upfront will empower professionals involved in the transaction process to be more confident that information on properties is robust and truly reflects their adherence to industry standards.”
