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GlobalData: UK construction output grows in Q2 although monthly data points to slowdown in activity

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World Cement,

While the UK construction industry contracted sharply by 14% in 2020, a strong recovery is expected, with output forecast to rise and grow by 10.6% in 2021, according to GlobalData. The leading data and analytics company notes that the successful vaccination programme allowed the government to fully lift lockdown measures in July and provided a significant boost to the construction industry. The total number of construction new orders rose by 17.6% in Q2 2021, compared with Q1.

Moustafa Ali, Economist at GlobalData, comments: “Last year’s performance was severely impacted by COVID-19 disruptions, and significant challenges remain - not least those stemming from shortages of key materials. Indeed, on a monthly basis, output fell by 1.3% in June 2021.”

“Construction output in the second quarter was supported by a strong increase in infrastructure construction, which grew by 15.9% in Q2 2021 on a quarterly basis. The infrastructure construction sector has performed strongly since the start of the pandemic, with output in June 2021 up by 27.7% compared to January 2020. However, the pandemic’s effect was significantly felt in the commercial construction sector, with output down by 20.1% in June 2021 compared to its pre-COVID-19 level in January 2020.”

Despite the industry’s recovery in the second quarter, there has been a weakening in output on a monthly basis.

Ali adds: “A contraction in construction output in June was driven by a sharp fall in private housing works, which fell by 4.6%. The fall in output has been attributed to a limited availability of construction materials as a result of global supply chain difficulties. It is likely that there will be continued weakness in construction activity in the coming months as contractors grapple with challenges posed by a rise in materials prices amid widespread shortages.”

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