Construction industry slows down yet again » SMEInsider

Construction industry slows down yet again

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The UK construction sector has seen a sharp decline in productivity over the past month, with the latest CIPS/Markit survey blaming the upcoming General Election for the decrease.

Today’s news highlights that business activity in the construction sector has hit a 22-month low, with output and new orders expanding at the slowest rates since June 2013.

The construction industry as a whole has really been struggling in the past few months. SME Insider recently reported that a bricklayer crisis within small construction businesses could have a major effect on the UK’s housing crisis. In today’s report, a key factor weighing on overall construction output growth was weaker new business gains in April.

Reports from survey respondents suggested that underlying conditions remained favourable, especially in the house building sector, but some clients had delayed spending decisions ahead of the general election

‘‘The General Election has given the sector pause for thought as procurement and supply management professionals reported a slowdown in the pace of new construction orders growth. Though the index still remains in positive terrain, this deceleration has been attributed to project delays and hesitancy as the country prepares to vote,’’ said Tim Moore, Senior Economist at Markit.

Although the statistics for April show that the construction industry is slowly falling in terms of growth, there is some room for optimism. The report shows a steady increase in the pace of job creation, despite a slower rise in new orders.

Not only does the UK Construction PMI survey indicate that output remained in growth territory during April, but the latest data signals ongoing strains on operating capacity. Highlighting this, subcontractor pay rates, a useful bellwether of industry pressures, increased at the fastest pace since the survey began 18 years ago,’’ continued Moore.

 

  • Gary Pettit

    Driving to work, this morning, the local radio announced Labour and Conservatives have both pledged to build 200,000 houses per annum while the Lib Dems say 300,000. On the back of this that same reporter announced a stark shortage in brick manufacturing and I smiled when he asked whether the newly elected Government were to resort to the 3 little pigs scenario by building houses of straw or sticks!

    That aside, the latest insolvency statistics once again show the construction industry is by far the highest number of insolvencies of all the different industries. From my experience those numbers are generally made up from sub-contractors who get “Outsmarted” by the larger contractors or simply the red tape that surrounds the industry.