Partner Article

Construction industry shows signs of growth

The UK construction industry is beginning to show some positive signs of growth, despite a slow start to the year.

In Q1 of 2012, the building market witnessed subdued conditions, and orders indicates that this is likely to worsen during the course of the year as the effect of public sector cuts begin to dig in. Despite this however, there was an improvement in industry conditions for some contractors, with projects to extend the rail network and increase energy capacity providing a real boost.

Commenting on the figures, Noble Francis, economics director at the Construction Product Association said: “It’s good to see that some companies are benefitting from schemes such Crossrail, Europe’s largest construction project, and projects in the energy sector such as nuclear and renewables.

“Yet, government cuts have begun to hit many parts of the construction industry and public sector construction will only deteriorate further given the scale of the cuts.”

He is now concern that private sector construction is not growing quickly enough to offset this, especially as private commercial properties, which represent the largest construction sector, continue to slow.

He added: “Work in the £22 billion commercial sector is relatively subdued outside of a few high profile offices projects within Central London and even in London, work is beginning to slow with projects, such as The Shard, finishing and relatively few replacements in the pipeline near term.”

The survey also found that almost 20% of all large and medium sized building contravtors had reported a reduction in workload during 2011, while orders continued to weaken in comparison with the last three months of 2011.

Stephen ratcliffe, director at UKCG believes that if opportunities were evenly spread between the North and South, infrastructure and building, this would help to boost the industry.

He said: “Market conditions remain challenging but we must not lose sight of the fact that there is still a £100 billion per annum market in construction.

“Central Government could help in getting on with delivering the much delayed school building programme and more local authorities need to wake up to the fact that investment in infrastructure means local growth and jobs.

“The Local Government Association’s rejection of the benefit of publishing a pipeline of infrastructure investment shows how out of touch some local authorities are with the need to work harder to deliver investment and growth.”

During the coming months, the Jubilee Celebrations and the Olympics are also set to affect productivity, indicating that figures later in the year are unlikely to improve. Employment prospects are subdued for large, medium and small building contractors but manufacturers and civil engineers expect to increase headcount.

This was posted in Bdaily's Members' News section by Ruth Mitchell .