Broad based construction recovery to continue

Broad based construction recovery to continue

Construction’s recovery from recession continued into the third quarter according to figures released today by the Construction Products Association, but profit margins fell.

 

CPA’s latest Construction Trade Survey showed activity continuing to rise for the second consecutive quarter in a broad based improvement shared by main contractors, specialists, civil engineers and product manufacturers. A balance of 43% of contractors reported increases in activity which was the second highest level since 2007.

 

Private new housing was the key driver of growth, with 22% of contractors, on balance, reporting increased activity compared to a year ago. Building new orders reached their highest level since 2007 and the most positive sector for new orders was public non-housing – mostly education and health – where a balance of 9% reported improvement.

 

CPA Economics Director Noble Francis said: “Although private housing is clearly driving industry growth, all construction sectors enjoyed increases in output. With rises in new orders and enquiries, the industry clearly expects that the recovery in output will continue over the next 12 months.”

 

Tender prices also increased in the third quarter for the first time in over four years, with 4% on balance reporting a rise. Higher costs, particularly labour, partly offset this however with 49% of building contractors reporting costs rises in the quarter. Profit margin falls were reported by 11% of firms surveyed on balance although 4% reported a rise.

 

Stephen Ratcliffe, Director of the UK Contractor’s Group, said: “These results are more encouraging signs of a turnaround in the construction industry. Housing, as the leading indicator, is still the main growth driver and general construction still has some catching up to do. Nevertheless, the mood music amongst UKCG members is more positive than it has been for some time.”

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