Mixed messages from latest construction figures

Dr Noble Francis
Dr Noble Francis
Dr Noble Francis

The Construction Products Association’s latest Construction Trade Survey, shows that firms across the construction industry reported growth in activity in the second quarter of 2015, marking the ninth consecutive quarter of growth. However, the near-term outlook is clouded by labour supply issues and rising wage costs.

Dr Noble Francis, economics director, said: “Firms across the whole construction supply chain, including building contractors, small and medium sized enterprises (SMEs), specialist contractors, civil engineers and product manufacturers all reported rises in output during Q2.

“Continuing the trend since recovery emerged in mid-2013, growth in output was led by the private housing sector, in which 43% of firms, on balance, reported a rise in output. Increased output was also reported in private commercial, the largest construction sector, where 18% of firms, on balance, reported rising volumes of offices and retail work. Contractors reported a decline in repair and maintenance work in Q2, reflecting a drop-off in measures installed under government schemes to boost energy efficient in recent months.

“The £23 billion repair and maintenance (R&M) sector will undoubtedly be affected by this and the government’s decision to close the Green Deal last month. Contractors reported a broad fall in orders across all sectors in Q2, however, not just for R&M. This will be countered to some extent by the fact that civil engineers, specialist contractors and SMEs reported an increase in new enquiries or orders in the quarter, while product manufacturers were upbeat over the outlook for sales.

“Of lingering concern,” Dr Francis concluded, “nine quarters of rising construction activity and expectations of higher workloads over the coming year raise the issue of whether the supply of skilled labour will meet demand. Half of contractors have already reported difficulties recruiting on-site trades such as carpenters, bricklayers and plasterers.”

Stephen Ratcliffe, director of UK Contractors Group, said: “The continued growth in construction reported by the latest survey is encouraging, and hopefully the clear general election result will help minimise any impact on work pipelines. Rising costs continue to reflect skills shortages, and the need to focus on recruiting and training new people into the industry.”