06 Jul Construction Sector Will Drive the Post-Covid Recovery
For all the sectors that have been dramatically hit by the global coronavirus pandemic, the one sector which has remained strong in the face of change is the construction sector.
While some sites were temporarily closed, many construction projects had to continue as they were deemed ‘essential works’ by the UK government.
As the construction industry creates more than £110 billion per annum and contributes 7% of GDP, the sector has become the backbone of the UK economy. Providing jobs, supporting British trade, and creating the required housing for a growing population.
Admittedly there have been some lows during the covid-19 outbreak, with construction productivity dropping by 40%, and more than 60 construction companies falling into administration between March and May.
For a while, it looked as though the construction sector was about to come to an abrupt halt, but it appears the sector is far more resilient than many would have us believe.
A History of Comebacks
Despite catastrophic consequences, history has shown us time and time again that the construction industry can drive economic recovery.
Britain was thrown into a recession after the Second World War, and the construction sector was put into action to rebuild homes and businesses that had been devastated by the war. In the World Economic Survey of 1955, the post-war recovery was quoted as being “truly impressive”, in terms of the speed of construction and spread.
Every previous crisis we have encountered provides us with the perfect case study of why the construction sector can bring the economy up along with it. While many private sector businesses are reluctant to invest with an uncertain economic future, the construction sector gains investment from governments who can increase infrastructure projects, maintenance schemes, and move the approval process along much quicker.
Localised Economic Boost
When you consider the strength of the construction sector there a few key factors, you must keep in mind.
The construction industry is labour-intensive, and according to the latest data, employs 2.7 million people in the UK directly and indirectly. It gains workers from other sectors very easily, and many of the projects created are localised to regions and towns where the post-covid recession will be hit the hardest.
The fact is, the construction sector provides a good economic ripple effect. Hiring local workers, purchasing from local suppliers, using transport, accommodation, food and many other goods and services that require a construction team to work efficiently.
Pair this with the reality that in the UK we still manufacture a vast majority of building materials, rather than importing them, and you’ve got a strong sector that will help to boost buying across other industries.
New Projects Kick-Off
For the construction sector, in particular, covid-19 was simply a short slump compared to other sectors who will remain changed forever.
The latest construction data from PMI revealed that now lockdown has been lifted on sites across the UK, it has seen higher levels of business activity, with residential buildings the best-performing area in June.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, has said, “ Builders were the stars of the UK economy in June, with the fastest rise in purchasing activity in almost five years.”
As the first major UK sector rebounding back to work, the construction sector provides hope for the rest of the UK economy that things will begin to move upwards.