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Second consecutive quarterly increase in construction activity reported

The latest Construction Trade Survey shows that activity in construction rose for the second consecutive quarter in Q3, and this growth was reported by firms across all areas of the industry, including building contractors, SMEs, specialist contractors, civil engineers and product manufacturers.

"It was encouraging to see that the recovery, which started in Q2, has continued into Q3,” said Noble Francis, economics director at the Construction Products Association. “A balance of 43% of contractors reported rises in activity – the second highest level since pre-recession 2007. Although private housing is clearly driving industry growth, all construction sectors enjoyed increases in output. With rises in new orders and enquiries, the industry clearly expects that the recovery in output will continue over the next 12 months.

"Construction tender prices in Q3 also increased for the first time in over four years, with 4% of firms, on balance, reporting a rise. However, higher costs – most recently due to increasing labour costs – offset this. As a result, 11% of firms, on balance, reported that profit margins in the industry declined in Q3.

"Overall, only 7% of firms reported difficulty in recruiting trades to work on construction sites. However, the breakdown of trades highlights that 34% of firms reported difficulties in recruiting bricklayers and 32% of firms reported difficulties recruiting plasterers due to the sharp increase in private housebuilding in recent months.”

Stephen Ratcliffe, director at the UK Contractors Group (UKCG), said: "These results are encouraging signs of a turn-around in construction. Housing, as the leading indicator, is still the main growth driver and general construction still has some catching up to do. Nevertheless, the mood music amongst UKCG members is more positive than it has been for some time."

Julia Evans, chief executive of the National Federation of Builders, added: "Confidence is returning to the industry and we are seeing measurable signs of growth and a healthy number of orders. However, the cost of doing business continues to rise as materials and labour cost increases far outpace revenues.

"Repair and maintenance continues to fall behind all other areas in construction and this could be taken as further evidence that the Green Deal is not yet taking hold. Furthermore, cutting the Energy Companies Obligation would further depress retrofit activity as it is the only scheme currently generating any significant output in this sector. We need greater promotion of all the options for retrofit and to not get tied up in the red tape of the Green Deal."

Source : Builders' Merchants News

18 November 2013
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