Mixed figures for construction sector

A number of reports show mixed performance for the construction industry over the past few months, with some sectors faring better than others.

A number of reports show mixed performance for the construction industry over the past few months, with some sectors faring better than others. Construction intelligence service, Barbour ABI announced that January 2019 had seen a 9.9% increase in contracts awards, amounting to a value of £5.5 billions.

Residential was the largest area for contracts awards in January 2019, representing almost a third of the total by value. This was closely followed by commercial and retail where 20% of contracts were awarded. The largest ‘residential’ project is for the University of Exeter East Park Campus student accommodation, a £95 million contract for provision of around 1,200 student bedrooms. The largest commercial and retail project was the £400 million Paddington Cube office project in London.

However, Barbour API does point to a volatile contracts market over the past 6 months. And while the short- to medium-term looks healthy, there is of course concern over the long-term market impact of Brexit.

The Federation of Small Businesses (FSB) has a higher level of concern, pointing to construction growth which has hit a 10-month low according to the Purchasing Managers’ Index. The Federation also points out that employment growth in the sector has fallen to a two-and-a-half year low.

FSB national chairman Mike Cherry commented on the figures: “Spiralling employment costs, skills shortages and a weak pound have made it increasingly tough for small construction firms to grow in recent years. Today’s PMI brings into sharp relief the impact that political uncertainty is having on one of our most important sectors.”

Lack of staff is holding many smaller businesses back from bidding from work or making further investment. Business uncertainty continues to be the main hurdle to growth: "Small business confidence is at a seven-year low. Two-thirds of firms are not planning to increase investment and, with inward migration from the EU down, more than a third say lack of the right staff is holding them back. A lot of small construction firms rely heavily on mid-skilled employees from Europe.”

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