UK construction output will be down by 13.6% in 2020

Following the release of UK GDP figures for Q3 by the Office for National Statistics (ONS) showing a sharp quarter-on-quarter rise in UK construction output in Q3.

Moustafa Ali, Economist at GlobalData, a leading data and analytics company, offers his view:

UK construction output is falling in line with GlobalData’s expectations, which will see a contraction of 13.6% in 2020. Following a 35.7% quarter-on-quarter contraction in Q2, the sector rebounded on a quarterly basis in Q3, with an expansion of 41.7%. This quarterly improvement reflects the reopening of construction sites and the lifting of lockdown measures across the country.

“The UK construction sector has been deeply scarred by the COVID-19 outbreak, and, despite the improvement in Q3, output remained below pre-pandemic levels – in September it was down 7.3% compared to February in seasonally adjusted terms.

“However, the pandemic has had a varied impact across the construction sectors, with infrastructure and private housing works surpassing their pre-pandemic levels in September. Despite the strong rebound in Q3, employment in the sector has fallen sharply, with 142,000 jobs lost since Q4 2019. Employment in the sector is at its lowest level since 2013, according to the latest Labour Force Survey released by the ONS. Monthly output growth also slowed in September, with growth expanding by 2.9% following growth of 3.8% in August and a 17.4% expansion in July.

“Although economic conditions have significantly improved in Q3, a second wave of infections coupled with continued lockdown measures will constrain output growth in the sector in Q4. While chances of a trade agreement between the UK and the EU have increased over the last few weeks, some uncertainty remains, and this will likely constrain investments into new projects. However, the government’s willingness to push ahead with infrastructure projects and the Bank of England’s stimulus measures will support the housing market, and the construction sector going into 2021.”

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