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NEWS
Construction industry begins catch-up
A
ctivity in the construction supply chain significantly picked up in the second
quarter of 2018 as the industry began its catch-up of work lost due to delays related to Carillion and severe weather conditions in Q1, according to a survey of product manufacturers, contractors, civil engineers and SME builders by the Construction Products Association (CPA).
The Construction Products
Association’s Construction Trade Survey for 2018 Q2 shows that during the quarter, 20% of heavy side product manufacturers and 6% of civil engineering firms returned to growth, whilst the proportion of firms reporting an increase in Q2 activity rose for main contractors, light side product manufacturers and SME builders.
New orders data signal that the
catch-up will continue in the coming quarters, driven by private housing, public housing and infrastructure, three sectors that account for £60bn of output annually.
Commenting on the survey,
Rebecca Larkin, senior economist at the CPA, said: “Order books at the start of the year had suggested there was scope for catching up with some of the work lost in the opening three months and the survey confirms the industry made a tentative start in Q2.
However, new growth will be skewed towards housing and
infrastructure – both privately and publicly funded – which remain dependent on programmes of government support and investor confidence in an environment of increasing economic uncertainty.” Brian Berry, chief executive of the Federation of Master Builders (FMB), said: “The second quarter of 2018 proved to be a positive one for the UK’s builders. This latest research shows that firms enjoyed stronger
growth in workloads than they did in the first three months of this year. Pleasingly, the construction SME sector has now enjoyed more than five years of consecutive growth. Furthermore, employment rose at a faster pace in the second three months of 2018 than it did in the first three months.
“Looking ahead, despite growing political uncertainty and Brexit now less than a year away, construction SMEs remain positive. Businesses are optimistic with nearly half of firms predicting rising activity levels over the next three months.”
In terms of the bigger picture, the CPA’s Summer forecasts anticipate growth for the whole of 2018 to fall 0.6%, before accelerating to 2.3% in 2019 and 1.9% in 2020, with house builders the primary drivers of growth for the whole industry – private housing output is forecast to rise 5% in 2018 and 2% in 2019. The infrastructure sector also
remains a primary driver of growth for the whole construction industry, with output forecast to hit a historic high of £23.6bn by 2020, driven by large projects such as HS2 and Hinkley Point C. Without the forecast growth in infrastructure and private housing activity, total construction output would fall by 3% in 2018 and remain flat in 2019.
The demise of Carillion combined with the bad weather earlier in the year lost UK construction £1bn of work. It is estimated 60% of this work may be recovered.
The Brexit uncertainty continues to drive the sharpest decline for construction in the commercial
sector, particularly felt in the offices sub-sector which is expected to fall 20% in 2018 and a further 10% in 2019. Meanwhile, the shift to online shopping is causing woes for the high street, with new retail construction expected to fall by 10% this year.
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Humidification and Evaporative Cooling
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