10 February 2014

Construction activity rises for third consecutive quarter

Construction activity rose in the fourth quarter, according to the latest Construction Trade Survey published today (10 February) by the Construction Products Association (CPA).
The report reveals that the increase in activity in the quarter is the first time in more than five years that the industry recorded three consecutive quarters of growth. Companies across all areas reported increased output, including building contractors, SMEs, specialist contractors, civil engineers and product manufacturers.

According to the survey, private and public new housing were the key drivers of construction growth in Q4 with balances of 20% and 32%, respectively. In addition, building contractors reported activity drops of 13% and 15%, respectively, in housing repair and maintenance and non-housing repair and maintenance.

Economics director at the CPA, Dr Noble Francis, said: 'The recovery, which started in 2013 Q2, continued, though risks remain. The rises in activity were slower than in previous quarters, and orders for new work similarly decelerated, potentially highlighting uncertainty amongst contractors as to whether the recovery would be sustained.'

He continued: 'Growth was driven by the housing sector, though this was partially offset by a drop in repair and maintenance work. Building contractors, SMEs and civil engineers reported rises in output, although Q4 levels were not as strong as Q3. Indeed, only product manufacturers saw activity levels higher in Q4 than Q3.'

Stephen Ratcliffe, Director UKCG, said: 'While contractors reported a slowdown in output growth this quarter, the trend over the last year remains one of modest recovery. Unlike housing, the broader construction sector remains a lagging indicator and we would expect the main growth to come later than the wider economy.

'Rising labour costs highlight the need to tackle skills shortages as we move towards recovery, and for a clear pipeline of future work so firms have the certainty to invest in apprenticeships and other long term training programmes.'

Julia Evans, Chief Executive of the National Federation of Builders added: 'These figures highlight the fragility of the construction industry's recovery, which is being driven by house building. Ongoing investment and future prospects point to further growth for the construction industry as a whole but as the economy recovers, it is important for companies to be at least as vigilant about costs, cash flow and late payment as they were during the downturn.'

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