Positive Outlook for Construction

Positive Outlook for Construction

John Woodhall considers developers’ attitude to the construction industry’s prospects.

The most recent Trade Survey by the Construction Products Association (CPA) revealed that, following another three months’ of growth, the construction industry has witnessed 17 successive quarters of growth.

Main contractors, SME builders, civil engineering firms, product manufacturers and specialist contractors reported an increase in sales, output and workloads in the second quarter of 2017. Yet, some commentators are cautious, making the point that rising demand is being bolstered by private housing and refurbishment projects, with fewer orders relating to commercial and industrial projects.

In our experience, developers remain upbeat. While the impact of whatever trade deals the UK is able to sign upon leaving the EU remains to be seen, many firms take the view that there is more to the economy than Brexit and are simply getting on with the job. Demand may be dampened, but developers are not seeing this as a major threat to future prosperity since, whatever the climate, entrepreneurs will always have ambitions to grow their businesses and so will need industrial, commercial and retail space.

The CPA’s survey shows that many main and specialist contractors are choosing to delay passing on increased materials costs or resist doing so altogether when tendering for new projects. Rising raw materials prices due to the devaluation of Sterling could become more of an issue post-Brexit, but our clients report minimal impact to date.

There is no denying that the labour shortage remains a problem and could contribute to a squeeze on margins. That said, the consensus among the residential developers and main contractors we have been speaking to is that the market is witnessing a shortage of subcontracting and more selective consultancy and this is what is pushing up construction prices.

Perhaps the best way forward for the UK’s construction industry is for developers, main contractors and subcontractors to continue to focus on what they do best since, ultimately, businesses will adapt to new trading arrangements, including any constraints imposed post-Brexit.

Download Vision October 2017 …