Did you know that there is a version of The Construction Index for the USA? Visit the site No thanks
Follow us on Twitter Follow us on LinkedIn Follow us on Instagram
Daily construction news
Weekly plant news

Construction News

Wed June 29 2016

Related Information
Related Information
Related Information
Related Information

News » Data » Industry associations see no shrinkage » published 18 Feb 2016

Industry associations see no shrinkage

Construction industry trade associations continue to paint a much rosier picture of the health of the industry than government statisticians, although there are clouds on the horizon.

While the Office for National Statistics calculated last week that construction industry output shrank by 0.4% in the fourth quarter of 2015, the industry’s own state of trade survey shows activity in construction rising for the 11th consecutive quarter in Q4. Order books are shrinking for many, however.

The industry survey is collated by the Construction Product Association (CPA) from data supplied by Build UK, the Federation of Master Builders, the National Federation of Builders and the Civil Engineering Contractors Association, as well as its own member

The ONS report last week attributed construction's fourht quarter a 1.4% decrease in repair and maintenance output. But the trade associations say that growth was reported by firms across all areas of the industry, although it was led by new building activity in the private housing, commercial and infrastructure sectors. However, as the graphs below indicate, the rate of growth appears to have slowed.

The survey found that a net balance of 23% of main building contractors reported that construction output rose in the fourth quarter of 2015 compared with a year ago.

A balance of 31% of specialist contractors reported a rise in output during Q4 and 6% of SME contractors reported increased workloads in Q4 compared to three months earlier.

Construction product sales increased, with 29% of heavy side manufacturers and 23% of light side manufacturers, on balance, reporting that sales were higher, year on year.

For civil engineering contractors, it was their 10th consecutive quarter of growth, although a balance of just 5% reported that workloads had increased, which was the lowest score since Q2 2013. Overall, 28% of respondents reported that workloads had risen, while approximately half of respondents reported that workloads were unchanged.

Order books are starting to become a concern, it would appear.

Main contractors’ order books were reported to be higher in only two sectors in Q4 compared to the previous quarter. 25% of main contractors, on balance, reported a rise in orders for private housing and 6% reported a rise in industrial orders. The lowest balance was recorded for the public housing sector, with a balance of 55% reporting that orders were lower in Q4. Negative balances were also recorded in the commercial, public non-housing and both housing and non-housing r&m sectors.

Commenting on the survey, CPA senior economist Rebecca Larkin said: “It is encouraging that growth continues to be reported across the entire construction supply chain.  Overall, the near-term outlook appears positive, as firms from construction product manufacturers at the beginning of the supply chain to specialist contractors, SME builders and civil engineers carrying out work on the ground reported modest increases in enquiries, orders or anticipated sales for Q1 and the 12 months ahead.  Main contractors’ order books suggest some weakness in Q1, however.

“Growth will continue to be led by work in the private housing, industrial and infrastructure sectors, but there are clearly areas that are languishing.  Activity and orders were reported to be lower in public housing, which reflects the headwinds facing housing associations and local authorities amid recent policy decisions.  Orders were also reported to be lower for repair and maintenance (R&M), both housing and non-housing, in Q4.

“A shortage of skilled on-site labour remains the largest threat to construction activity over the coming months, however.  Half of main contractors found it difficult to recruit bricklayers, carpenters and plasterers in Q4, which continues to exert upward pressure on wage bills and raises the concern of whether expected volumes of work can be delivered.”

A shortage of skilled tradesmen remained an issue for the National Federation of Builders, said Paul Bogle, its head of policy and research.

Build UK chief executive Suzannah Nichol agreed. Speaking for 25 national contractors as well as for 42 specialist trade associations representing trades such as glaziers, tilers and joiners, Mrs Nichol said: “Whilst we are continuing to see growth in construction, the market is very mixed and the difficulties in recruiting the right skills are causing very real concerns as labour costs rise.  With an expectation of rising workloads over the coming 12 months Build UK will focus on inspiring young people and those looking for a change of career to choose construction whilst motivating the workforce to stay within the industry.”

 

 

MPU

Further Images

Download our free construction news iPhone / iPad app. Sign up to our FREE email newsletters or subscribe to our RSS feed for regular updates on the latest Construction News, Plant News, Contract News & Supplier News. The Construction Index also provides the latest Construction Tenders, Construction Market Data & Construction Law Commentary all FREE.

This article was published on 18 Feb 2016 (last updated on 18 Feb 2016).

More News Channels