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Construction output in December 2020

How has the construction market performed in December 2020?

Construction output in December 2020 fell by 2.9% compared to November 2020. There has not been a decline in monthly growth since April 2020 when the first national lockdown was in full force. This decline was not reflected in the performance of the landscaping industry for the same month. You can read more about this in the UK Landscape Barometer – December 2020 here within Pro Landscaper February 2021. 

Quarterly and monthly all work index, chained volume measure, seasonally adjusted, Great Britain, January 2010 to December 2020

construction output - Quarterly and monthly all work index, chained volume measure, seasonally adjusted, Great Britain, January 2010 to December 2020

Monthly construction output

Comparing December 2020 to November 2020, construction output fell by 2.9%; down to £13,516 million. This is the lowest level of construction output since August 2020 (£13,181 million) and the first monthly decline since April 2020. The drop in April was a record fall of 40.7%.

This may have knock-on effects to businesses that are heavily involved in what is typically the last phase of a construction project, the landscaping.

Quarterly construction output

Though the monthly construction output fell in December 2020, Quarter 4 was up on Quarter 3 by 4.6%. This follows the dip we can see from the record quarterly decline (32.7%) in Quarter 2 and the bounce back in Quarter 3 which had a record quarterly growth of 40.7%.

The quarterly growth can be attributed to the construction output in October 2020 and November 2020 which was up by 1.3% and 1.7% respectively. These two months of increased output offset the decline seen in December 2020.

Though the UK Landscape Barometer was not yet established in Quarter 2, we did hear that the landscaping industry was not hugely affected from those we spoke with. If we had a similar graph for the landscaping output, the trough might not be so severe. Furthermore, evidence has suggested the landscaping industry was booming in Quarter 3 and Quarter 4, 2020. Whether there is a link between the recovery of the construction industry and this performance is hard to say.

Quarterly construction output: percentage change

All work construction output quarterly growth, chained volume measure, seasonally adjusted, Great Britain, Quarter 1 (Jan to March) 2010 to Quarter 4 (Oct to Dec) 2020, percentage.

construction output - All work construction output quarterly growth, chained volume measure, seasonally adjusted, Great Britain, Quarter 1 (Jan to March) 2010 to Quarter 4 (Oct to Dec) 2020, percentage.

Source: Office for National Statistics – Construction Output and Employment

We can clearly see the record fall in Quarter 2 2020 and the record growth in Quarter 3 2020. What might be less obvious is that Quarter 4 2020 had the largest output growth since Quarter 2 in 2010 which was 4.9%. It is also encouraging to know that Quarter 4 2020 saw the fourth largest overall construction output growth since quarterly records began in 1997.

Whilst construction output levels have not yet returned to normal overall, it is encouraging to see the bounce back after the initial downturn.

Construction output breakdown

Type of workInitial fall: change in construction output February 2020 to April 2020 (%)Recovery: change in construction output April 2020 to December 2020 (%)Difference in construction output February 2020 to December 2020 (%)
Total all new work-44.565.7-8.0
Total repair and maintenance-39.773.94.9
Total all work-42.868.8-3.5

Source: Office for National Statistics – Construction Output and Employment

 

From this table we can see that new construction work has not yet recovered and is below pre-coronavirus levels by 8%. Repair and maintenance work however has recovered and in fact, exceeded the levels found before the pandemic by 4.9%. The total construction output was below pre-coronavirus levels by 3.5% (£492 million).

 

 Type of workInitial fall: change in construction output February 2020 to April 2020 (%)Recovery: change in construction output April 2020 to December 2020 (%)Difference in construction output February 2020 to December 2020 (%)
New HousingPublic-68.2144.8-22.3
Private-59.1140.9-1.6

Source: Office for National Statistics – Construction Output and Employment

 

New housing is an important area for the landscaping industry. New public housing has been hit the hardest of all construction works as it had the largest initial fall of 68.2% resulting in the largest difference in construction output of 22.3% between December 2020 and pre-coronavirus levels.

Private housing was also hit hard with an initial fall of 59.1% however it has bounced back much better and is only 1.6% down on pre-coronavirus levels.

 

 Type of workInitial fall: change in construction output February 2020 to April 2020 (%)Recovery: change in construction output April 2020 to December 2020 (%)Difference in construction output February 2020 to December 2020 (%)
Other new workInfrastructure-24.939.44.8
Public-27.417.2-14.9
Private industrial-45.352.3-16.7
Private commercial-42.040.7-18.4

Source: Office for National Statistics – Construction Output and Employment

Infrastructure was the only type of new work to recover above pre-coronavirus levels in December 2020, sitting at a 4.8% increase. While this is positive news, it is a sector that arguably has little impact on the landscaping industry as it consists of sectors such as railways, roads, and electricity. The remaining types of new work including public, private industrial, and private commercial, are all still below pre-coronavirus levels.

 

 Type of workInitial fall: change in construction output February 2020 to April 2020 (%)Recovery: change in construction output April 2020 to December 2020 (%)Difference in construction output February 2020 to December 2020 (%)
Repair and maintenancePublic housing-46.689.00.9
Private housing-50.0116.58.3
Non-housing-30.448.83.6

Source: Office for National Statistics – Construction Output and Employment

As previously mentioned, repair and maintenance sectors have recovered above pre-coronavirus levels with private housing seeing the biggest difference at 8.3% higher. This could be a good indication for domestic landscapers as perhaps the landscaping of these private housing jobs might be prioritised alongside repair and maintenance works.

Construction output comparing pandemic to the 2008/09 recession

Number of quarters after pre-recession and pre-pandemic peak, quarterly all work index, chained volume measure, seasonally adjusted, Great Britain, quarters since peak level of output

construction output - Number of quarters after pre-recession and pre-pandemic peak, quarterly all work index, chained volume measure, seasonally adjusted, Great Britain, quarters since peak level of output

Source: Office for National Statistics – Construction Output and Employment

Notes: Quarter 1 2008 is used for the 2008/09 pre-recession peak and Quarter 4 2019 is used for the 2019/20 pre-pandemic peak.

It is clear to see how sharply construction output fell during the pandemic compared to the 2008/09 recession. Further, and encouragingly, how quickly the industry bounced back.

When the first national lockdown was imposed, there was great uncertainty across all markets, including the landscaping industry. The restrictions during this time had a stronger impact compared to more recent ones for both the construction and landscaping industries.

Interestingly in construction output, new work recovered to pre-recession levels much sooner than repair and maintenance during 2008/09; albeit 29 quarters later. The opposite is true when looking at pre-coronavirus levels as repair and maintenance output has been driving the recovery of the construction industry. It took only three quarters to bounce-back.

There are still many quarters to come but for now, it appears that the construction industry has recovered much faster than the 2008/09 recession. Hopefully, the limited duration of severely decreased construction output means minimal negative impacts on the landscaping market in the long-term.

Construction output in December 2020: month-on-month

Month-on-month, chained volume measure, seasonally adjusted, Great Britain, December 2020 compared with November 2020

construction output - Month-on-month, chained volume measure, seasonally adjusted, Great Britain, December 2020 compared with November 2020

Source: Office for National Statistics – Construction Output and Employment

Anecdotal evidence suggested that unlike the first National lockdown, the construction industry remained mostly open in December 2020. Regardless, all types of work saw a fall in output. Social distancing measures and more than usual site shutdowns over the Christmas period could be factors in this.

In comparison, most of the landscaping industry seemed to be performing equally, if not better, than November 2020 as found in the UK Landscape Barometer. The same challenges (social distancing and Christmas shutdown) have been faced by those in landscaping, yet performance has not been as adversely affected.

All new work sectors in construction fell, averaging at -3.8% (£332 million). We can see that the largest decrease was private commercial new work at -6.0% (£124 million). This was double (as a percentage) the decrease of the next largest contributing sector, private new housing, which dropped by 3.0% (£91 million).

Construction output by new work sectors: February 2020 to December 2020

Components of new work, index volume measure, seasonally adjusted, Great Britain, February 2020 to December 2020

Components of new work, index volume measure, seasonally adjusted, Great Britain, February 2020 to December 2020

Source: Office for National Statistics – Construction Output and Employment

New work in infrastructure recovered in August 2020 performing similarly to pre-coronavirus levels since then. New work in private housing went above pre-coronavirus levels in November 2020 but has dropped below that mark in December 2020. No other new work sector has recovered completely, and we can see they are remaining generally flat beneath the pre-coronavirus level.

It appears that new work in each sector of the construction industry is stabilising above 75% of pre-coronavirus levels. Will we see the landscaping market effects maximised at around 25%?  All new work is sitting at an average 92.0%. Perhaps then the landscaping market will not even see 10% of these effects?

Construction output by repair and maintenance sectors: February 2020 to December 2020

Components of repair and maintenance, index volume measure, seasonally adjusted, Great Britain, February 2020 to December 2020

Components of repair and maintenance, index volume measure, seasonally adjusted, Great Britain, February 2020 to December 2020

Source: Office for National Statistics – Construction Output and Employment

Repair and maintenance sectors are all remaining above pre-coronavirus levels despite an overall decrease of 1.5% (£78 million) in December 2020. Non-housing repair and maintenance dropped by 2.0% (£53 million), the largest of these sectors.

New orders in Quarter 4 2020

Components of new work, new orders, constant prices, seasonally adjusted, Great Britain, Quarter 1 (Jan to Mar) 2014 to Quarter 4 (October to December) 2020

Components of new work, new orders, constant prices, seasonally adjusted, Great Britain, Quarter 1 (Jan to Mar) 2014 to Quarter 4 (October to December) 2020

Source: Office for National Statistics and Barbour ABI

Total new construction orders decreased by 8.8% (£962 million) in Quarter 4 2020 compared to Quarter 3 2020. Quarter 3 2020 had a record increase of 71.8% (£4,550 million) from Quarter 2 2020.

New work in Quarter 4 dropped below £10 billion for the second time (the first being Quarter 2 2020) since Quarter 2 2012.  This is not good news for the landscaping industry as new construction work drives new business into the landscaping industry.

On a more positive note, for both the construction and landscaping industry, new housing has risen by 6.4% (£200 million) in Quarter 4 2020, reaching a level above the pre-coronavirus Quarter 4 2019 level.

Anecdotal evidence suggested that the growth in Quarter 3 2020 was driven by built-up demand from Quarter 2. Quarter 4 declined again as the pandemic worsened and further uncertainty grew.

Similarly, it seemed demand in domestic landscaping grew from Quarter 2 due to the national lockdown. Many clients were spending more time at home and prioritising the improvement of their living space. Contrastingly, the decline in Quarter 4 2020 in the construction industry was not really seen within the landscaping market.

It was also found that new, high-value orders dropped during Quarter 4 2020 within the construction industry. Fewer new orders above £200 million were placed than even Quarter 2 2020 which was an exceptionally poor period of performance. This figure fell to the lowest it has been in the past four years.

This could be a sign that things will slow down for landscape architects and commercial landscapers in future. Large projects not entering the construction phase now will likely not be noticed in landscaping until further down this road.

Quarter 4 2020: new orders breakdown

Construction new orders main figures, Quarter 4 (October to December) 2020

Seasonally adjusted volume, £ million and percentage change, Great Britain

Type of work

Value (£m)

Most recent quarter-on-quarter

Most recent quarter on quarter in previous year

Most recent year-on-year

All new work

9,923

-8.8%

-12.9%

-12.8%

All new housing

3,337

6.4%

0.6%

-14.5%

    Public

252

12.0%

17.3%

1.3%

    Private

3,085

6.0%

-0.5%

-15.7%

All other work

6,587

-15.0%

-18.4%

-12.1%

Infrastructure

1,881

-17.9%

-10.7%

1.9%

Public

1,028

-10.9%

-21.3%

-28.2%

Private Industrial

1,246

24.3%

-6.1%

-12.8%

Private commercial

2,432

-26.4%

-27.1%

-14.2%

Source: Office for National Statistics and Barbour ABI

Private commercial work fell by 26.4% (£871 million). Infrastructure fell by 17.9% (£410 million) as each sector within infrastructure (railways, roads, and electricity) declined quarter-on-quarter. Private commercial work, and infrastructure, were the main sectors driving in the overall decline in all other work, which dropped by 15%.

The largest increase quarter-on-quarter new orders was in the private industrial sector. It increased by 24.3% (£244 million) mainly due to orders for factories. The number of new orders for factories was the highest in Quarter 4 2020 since Quarter 4 2005. Anecdotal evidence from our green space survey suggests that this news will not have much impact on the landscaping market as there is limited green space as part of industrial estates. If this is a reality, pressure should be mounted to change this to boost the landscaping industry and ease climate impacts.

New housing orders rose in both the private (6.0%) and public (12.0%) markets for Quarter 4 2020. This is much more positive news. We found from the results of our green space survey to property developers that green space and landscaping is becoming much more important in developments. The rise in new housing orders for the construction industry should then play a positive role in new orders for the landscaping industry.

Despite the quarter-on-quarter rise in new housing orders, the year-on-year results show a decrease of 14.5% driven by a 15.7% decrease in new private housing. This bigger picture view of the new orders in housing may hint at harmful effects to landscaping businesses. The only two sectors up year-on-year were new public housing at 1.3% and infrastructure at 1.9%.

Total new orders fell by 12.8% year-on-year making this the third consecutive yearly fall and the lowest growth since 2018. The drop of 15.7% in 2018 could be attributed to several high-value orders placed in 2017 for High Speed 2 (HS2). Again, this could spell bad news for landscaping businesses but may not be seen just yet.

Construction output in December 2020

The output of the construction industry has a knock-on effect to the landscaping industry. We can use the statistics, performance, and output to estimate effects in the landscaping market. While there was a monthly decrease in construction output in December 2020, and overall output is down 3.5% on pre-coronavirus levels, it seems the sector has bounced back reasonably well. Hopefully the trend continues and future growth lies ahead, and the downturn in construction output has minimal effects on the landscaping industry.

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