Construction News

Wed August 05 2020

Related Information

Industry surveys show picture of decline

12 Feb 19 Latest research shows that the construction industry experienced a mixed quarter for sales, output and new orders in the final three months of 2018.

Every three months the Construction Products Association (CPA) collates the quarterly workload surveys of the supply chain’s product manufacturers, contractors, civil engineers and SME builders.

Overall, the picture is one of declining workloads in the fourth quarter of 2018 and falling profit margins. Profit margins fell for a net balance of 13% of main contractors and 40% of specialist contractors in Q4.

On the positive side, product manufacturers reported rises in sales and workloads increased for SME builders. However, on the negative side, output was reported lower for main contractors and specialist contractors, whilst workloads declined for civil engineers during the quarter. Furthermore, the weakness in contractors’ workloads was broad-based across sectors from private housing to commercial, while for civil engineering contractors, the decreases in activity were reported in seven out of 10 infrastructure subsectors, including local roads and railways.

Related Information

Rebecca Larkin, senior economist at the CPA, said: “Parts of the construction supply chain have clearly started to feel the effects of the falls in new orders since the EU referendum translating into reduced activity in sectors such as high-end residential, commercial offices and industrial factories. The uncertainty that precludes investment decisions in these sectors with a high upfront outlay may also be benefiting other areas of the supply chain. Product manufacturers’ optimism looking towards 2019 may be reflective of continued high levels of activity in buoyant regions outside of the southeast, as well as an element of precautionary stockpiling on-site providing a near-term sales uplift.”

Federation of Master Builders chief executive Brian Berry said: “Workloads for small construction firms continued to rise in the last quarter of 2018 but after 23 consecutive quarters of growth, these latest results could mark a tipping point. Mounting Brexit uncertainty is starting to have a tangible effect and the indicators are not good with almost half of builders reporting signs of a weakening housing market. Furthermore, a worrying one in five construction SMEs has had projects stalled in the past three months due to delays to loans, or loan refusals, from the banks. Together with ever-rising costs due to material price hikes and labour shortages, the headwinds are blowing in the wrong direction for the UK construction sector.”

David Bishop, policy manager at Build UK, which simultaneously represents major contractors and specialists, said: “The latest state of trade result highlights a difficult Q4 with half of main contractors and a quarter of specialists reporting a decrease in output compared to this time last year. Furthermore the lack of required skills remains a concern along with the ongoing uncertainty caused by Brexit.”

Got a story? Email


Click here to view more construction news »