UK’s ninth quarter of growth

By Sandy Guthrie10 August 2015

A ninth consecutive quarter of growth for the UK construction industry has been reported by the UK’s Construction Products Association in its latest Construction Trade Survey, although it warned that this was leading to a skills shortage.

The Association said its survey showed that firms across the construction industry had reported growth in activity in the second quarter of 2015, but said that the short-term outlook was 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, SMEs (small and medium-sized enterprises), specialist contractors, civil engineers and product manufacturers all reported rises in output during the second quarter.

“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.”

He said that 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 (R&M) work in the second quarter, which the Construction Products Association said was reflecting a drop-off in measures installed under government schemes to boost energy efficient in recent months.

Dr Francis said, “The £23 billion (€32.60 billion) R&M sector will undoubtedly be affected by this and the government’s decision to close the Green Deal last month.”

The UK government has announced that it is scrapping its Green Deal funding programme promoting domestic energy efficiency because of “low take-up and concerns about industry standards”.

Dr Francis continued, “Contractors reported a broad fall in orders across all sectors in the second quarter, 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.”

He said the lingering concern was that nine quarters of rising construction activity and expectations of higher workloads over the coming year raised the issue of whether the supply of skilled labour would meet demand.

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