Construction industry growth continues but private housing slows

Work under way on the commercial and residential use South Bank Tower project
Work under way on the commercial and residential use South Bank Tower project

A sixth consecutive quarterly rise in construction activity has been reported for 2014 Q3 by the Construction Products Association, with a slow-down in private housing output offset by growth in all other sectors.

 

The Association’s latest Construction Trade Survey saw 60% of building contractors report, on balance, that construction output rose in the third quarter of 2014 compared with a year ago.

 

43% of firms reported growth in the largest construction sector, private commercial, which covers offices and retail work. Meanwhile a further 41% of respondents said output had increased in the private industrial sector, including factories and warehouses construction.

 

However private housing activity slowed in Q3 as 35% of firms surveyed reported a rise in output compared with 57% in Q1 and 41% in Q2.

 

UK Contractors Group director Stephen Ratcliffe said: “These figures are encouraging, especially since growth is now apparent in all sectors of construction. They are in line with ONS data and paint a better picture than earlier this year.”

 

The Trade Survey also shows construction firms reported rises in ‘forward looking indicators’ such as orders and enquiries, foreshadowing a potential rise in activity throughout 2015. This included a rise in Q3 order books in private housing for 15% of contractors, while 13% and 12% of firms reported rises in orders across private industrial and public non-housing respectively.

 

Construction Products Association economics director Dr Noble Francis 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.”

 

11% of respondents experienced a fall in margins in Q3 compared with Q2. The survey saw 68% report rise in labour costs and 74% say that materials costs rose in Q3 compared with the previous quarter.

 

Photo copyright Pierre-Selim and licenced for reuse under this Creative Commons Licence

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