UK’s rising trend continues

By Sandy Guthrie23 February 2015

UK construction activity rose for the seventh consecutive quarter in the final three months of 2014, according to the latest Construction Trade Survey published by the UK's Construction Products Association.

It found that firms across UK construction from the largest contractors to SMEs (small and medium-sized enterprises), product manufacturers and civil engineers reported output growth in the fourth quarter, with further growth expected in 2015.

Dr Noble Francis, economics director at the Construction Products Association, said that another quarter of growth confirmed the construction industry’s strongest performance in six and a half years.

“Activity rose in the fourth quarter compared to a year earlier according to 44% of contractors, on balance, although this moderated from 60% reported in the third quarter.”

He said, “Increased activity was led by the private housing sector, in which 53% of firms, on balance, reported a rise in output. Output was also driven by private commercial, the largest construction sector, where 40% of firms on balance reported rising volumes of offices and retail work.”

Contractors expected continued strength in private housing and commercial this year, he said, adding that this was boosted by public non-housing, as a stream of work on the UK Government’s Priority School Building Programme got underway.

“Outside of these sectors, however, order books weakened in the fourth quarter, suggesting a moderation in growth in 2015. SMEs in particular reported a noticeable slowdown in new enquiries in the fourth quarter.”

He said, “In addition, only product manufacturers felt the effects of falling oil prices in the fourth quarter. Contractors, SMEs and civil engineers continued to report elevated costs, which implies any gains from a wider slowdown in inflation are yet to filter down the supply chain.”

Stephen Ratcliffe, director of the UK Contractors Group (UKCG), said, “Recovery in construction is good news for everyone in the industry. Hopefully, possible political changes in the UK and economic uncertainty in the Eurozone will not damage the industry’s growth prospects.”

Richard Beresford, chief executive of the National Federation of Builders, said, “While the industry is reporting broad-based growth and a strong pipeline of work, it is unable to capitalise on that. The rising costs associated with a shortage of skilled labour and for tenders are eliminating the profit advantage that increased workloads bring.

“With changes to procurement rules imminent, now is the time to see how we can remove unnecessary cost from the tendering process,” he added.

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