Construction grows for sixth quarter in a row

Aaron Morby 10 years ago
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Construction activity rose in the third quarter, marking the sixth consecutive rise for the first time more than six years.

According to the latest pan-industry trade survey, private housing output slowed in the period, but this was more than offset by strong growth in all other sectors.

Firms across construction, from SMEs to the largest contractors, reported increased output in the third quarter.

Dr Noble Francis, Economics Director at the Construction Products Association, said: “The only dark clouds in construction were seen around margins, which continued to be hit hard.

“Construction firms had to suffer rises in costs in Q3 once again and although tender prices also rose in Q3, the benefits of these tender price rises are only likely to be felt when the work from these contracts occurs in 2015.”

Private housing activity slowed in Q3 with 35% of firms, on balance, reporting that private housing output rose compared with 57% in Q1 and 41% in Q2.

On balance, 43% of firms reported growth in private commercial, the largest construction sector, which covers offices and retail work.

A further 41% of firms, on balance, reported work growing for factory and warehouse construction.

Forward looking indicators are also good. A rise in Q3 order books in private housing was reported by 15% of contractors, on balance.

A further 13% and 12% of firms reported rises, on balance, in orders books across private industrial and education and health.

Stephen Ratcliffe, Director UKCG, said: “Labour cost rises do signal the need for the industry to attract new recruits and emphasise the importance of our campaign ‘Born to Build’, which is trying to entice young people to consider a career in construction.”

Richard Beresford, Chief Executive of the National Federation of Builders, added: “The good news of across the board rises in reported output makes it tempting for us to take our eye off some of the industry’s structural issues.

“With more work around, we have a little breathing space, an opportunity to address access to finance, tender costs, skills and security of materials’ supply to ensure a more sustainable recovery.”

Key findings

  • 60% of building contractors, on balance, reported construction output rose in the third quarter compared with a year ago
  • Private housing output in Q3 rose according to 35% of building contractors, on balance
  • 43% of building contractors, on balance, reported that private commercial output rose in the third quarter of 2014 compared with a year ago
  • Private industrial output in Q3 rose according to 41% of building contractors, on balance
  • 68% of firms reported labour costs rose and 74% of firms reported that materials costs rose in Q3 compared with the previous quarter
  • 11% of building contractors, on balance, reported a fall in margins in Q3 compared with Q2
  • 41% of building contractors reported difficulties recruiting bricklayers in Q3 compared with 47% in Q2
  • 39% of building contractors reported difficulties recruiting carpenters in Q3 compared with 47% in Q2

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