Construction Industry Sector Update – May 2018
After looking into a variety of things which have affected the construction industry, we at Tradesoft have come up with a review of the sector at the moment, and the factors behind this.
Overall, it’s a bit of a mixed bag. The sector as a whole has varied between growth and shrinkage over the last few months. Just a few articles we found suggested that:
- According to the Financial Times, there was a technical recession last year for two quarters, but in October the sectorreturned to growth.
- Reuters suggest that growth last year was the weakest of the G7 nations, and output dropped at the end of the year.
- The Office for National Statistics reckoned that construction output in February 2018 was 3.0% lower than the same month last year.
- The Purchasing Managers Index data for this year shows a drop in business activity in March 2018.
Opinions differ. There’s no one view on how the construction industry is doing right now – although considering how it seems to be swaying between growth and shrinkage, it’s certainly not either a boom time or major recession for the sector.
So what’s causing all this? There are a few factors.
- Brexit. All the uncertainty which still remains over the UK’s departure from the EU next year is affecting investment, with the consistently weak pound not helping matters either.
- The collapse of Carillion. When the construction giant collapsed in January, it didn’t really get the year off to the best start. The company itself left a lot of debt, and hundreds of workers unemployed. It also left plenty of sub-contractors with a lot less certainty as they relied on the company.
- The Beast from the East. All that snow in February/March across the UK caused a drop in output whilst the weather caused widespread havoc.
It’s not necessarily looking great right now for the sector, just based on those factors. However, hopefully weather disruptions due to snow and extreme cold won’t turn up until much later in the year now. Brexit isnt’ going to happen until the end of next March, and 21 months later the UK will be out of transition.
There is good news however. According to statistics whilst some areas of construction are down, house building has been increasing over the last few months. It’s probably related to the government’s pledge in the Budget to loan billions of pounds to companies to build homes with the aim of having an extra 300,000 properties on average being built a year in the mid 2020’s.
At the beginning of 2018, the construction industry seems to be slightly stagnating – it’s growing, contracting, then growing again. Every statistic seems to tell a different story. However, the construction industry has faced bigger challenges recently – most notably the financial crisis 10 years ago. It’s just a matter of waiting for the difficulties to end.
With the industry in a state of flux, want to save some time and money to help your construction business?