After that record 41% fall in April 2020, construction output had been rebounding, growing every month – until now.

According to the Office for National Statistics (ONS), December 2020’s output was down 2.9% compared to November, falling to £13,516m and its lowest level since August.

December saw falls in both new work (3.8%) and repair and maintenance (1.5%).

The December 2020 level of output is 3.5% below the pre-coronavirus February 2020 level, the ONS said.

Quarterly construction output for Q4 2020 grew by 4.6% compared with the third quarter. This was driven by quarterly growth in both new work (4.0%) and repair and maintenance (5.5%).

However, new orders decreased by 8.8% (£962m) in Q4 compared with Q3,  following the record quarterly growth of 71.8% in Q3.

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The ONS report broadly concurs with the latest survey of construction purchasing managers, which indicated that the bounce back from the first lockdown had now started to wane.

Output in December 2020 fell to its lowest level since August 2020, but the quarterly index shows Q4 still rising
Output in December 2020 fell to its lowest level since August 2020, but the quarterly index shows Q4 still rising

ONS also made some interesting observations comparing the construction industry’s recovery from the current pandemic to its recovery after the 2008/09 global economic crash. Although 2020 saw a much more sudden peak-to-trough fall in output, “it is noticeable how much quicker the industry has recovered than after the 2008 to 2009 recession,” the ONS said. This reflects the sudden closure and then reopening of sites last spring, by and large, although recovery has been driven in recent months by the bounce-back in repair & maintenance output, which has taken only three quarters to recover above its pre-coronavirus level. In comparison, in 2008 to 2009, it was new work that recovered sooner than repair & maintenance, though this took 29 quarters to reach its pre-recession level of output.

Gareth Belsham, director of surveyors Naismiths, commented: “Economic gravity has finally caught up with the UK’s construction sector, which at times last year appeared to be in a boom while other industries were in a bust. December’s fall in output is a drop in the ocean compared to the eyewatering 40% contraction suffered last April. Nevertheless the slowdown matters because it has undone some of the great progress made over the summer and autumn.

“Across 2020 as a whole, output shrank by 12.5%, its worst performance since the collapse of 2009. Of course these things are relative – the UK economy as a whole shrank by almost 10% in 2020, its largest annual contraction on record. But December’s slowdown means that construction ended 2020 with monthly output 3.5% smaller than its pre-pandemic level, and this is calling into question the sense of construction’s exceptionalism.

“After months of optimism and strong demand, new orders across the industry slowed in the final quarter of the year. Things were more upbeat for housebuilders – who saw new orders for private sector homes jump by 6% compared to the previous quarter. The net effect of this data is to give the industry a reality check. While construction’s recovery is happening much quicker than the painfully slow return to growth seen after the global fFinancial crisis, progress is still fragile and the breathless rate of growth seen last summer is unlikely to return.”

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