UK construction output growth will contract by 15.1%, despite recovery in October

UK construction output continued its recovery in October, but GlobalData, a leading data and analytics company, holds its estimate that output for the year as a whole will contract at its fastest ever rate of 15.1%.

Moustafa Ali, Economist at GlobalData, comments: “The output increase of 1% month on month in October was in line with GlobalData’s expectation of slower growth in the sector in Q4 2020, compared to the fast pace of recovery in the previous quarter. The renewed lockdown measures coupled with the Brexit uncertainty will constrain growth going into the end of the year.”

The slowdown in economic activity will likely weaken activity in the industry following the tightening of lockdown measures in late October. Another major downside risk for the economy is the possibility of a disorderly Brexit – the UK and the EU failing to agree a deal will likely lead to significant supply shocks and impede access to labour and materials. This will likely become a significant cost for firms already struggling with cash flow difficulties because of the virus outbreak.

Ali continues: “Despite the strong recovery in the sector over the last 6 months, construction output remains 6.4% below its pre-Covid level, the only sub-sector which has recovered above the February 2020 level is infrastructure construction. Overall, construction output was down 7.5% on a yearly basis in October 2020.”

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