Construction & infrastructure review 2020

Construction & Infrastructure review: The key to recovery

2020 was a tumultuous year, no one could have foreseen the rapid changes the country underwent in March and April and the impact the COVID-19 would have.

Inevitably, construction performance dipped as the country went into lockdown, with figures taking a huge knock. Figures published by the Office for National Statistics for the period to August 2020 indicated that infrastructure was the only element of the wider construction and infrastructure sector to have returned to pre-pandemic levels of output, with infrastructure output in August 0.6% higher than in February. This was achieved thanks to a 10.9% increase in output in the three months to August 2020 compared with the previous three months.

While the sector has, inevitably, been affected by the ongoing economic uncertainty, the outlook remains positive, with housing being a major factor in recovery. According to the latest figures released in December, IHS/CIPS* PMI marketing activity showed sustained recovery across the construction sector, with the latest index recording 54.7, up from 53.1 in October and registering above the 50.0 no change value for the sixth consecutive month.

For infrastructure, the outlook overall is good, with Civil Engineering returning to growth in November, registering at 52.3.

Figures published by the Office for National Statistics in December for UK construction output**, show that, whilst the pandemic is still having a biting effect across much of industry, construction is steadily recovering. The latest figures record that construction output grew by 1.0% in the month-on-month all work series in October 2020. Increases were seen in both new work (0.3%) and repair and maintenance (2.3%); which helped the figures rise to £13,066M. This is the sixth consecutive month of growth for construction output, but the smallest monthly increase in that time.

The long-term effects of the pandemic and current lockdowns and tiered areas can still be seen, however, with the figures still well below pre-lockdown figures – by some 6.4%.

All sectors of the industry saw growth in October, apart from private new housing and private commercial new work. The only sector to recover completely is infrastructure, which is now recording output levels above the April decline.

The figures show that both infrastructure and public other new work were both more resilient to the lockdown effect, showing smaller drops in work at the beginning of the crisis and consistent growth ever since, albeit relatively small.

The construction industry as a whole has shown its resilience to the changes, bouncing back to growth under extraordinary circumstances where other industries have struggled.

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