Construction Trade Survey shows rise in activity and output

Growth up for a ninth quarter in succession.

The latest Construction Trade Survey for the second quarter of 2015 has been published and it makes for encouraging reading for the construction industry.

Activity across the industry is on the up, with specialist contractors, SME builders, large contractors and product manufacturers reporting workload, output or sales increases during the quarter.

The ninth successive quarter of growth, the figures in the Construction Trade Survey have shown that on balance, 17% of contractors said that output rose in Q2 when compared with the same quarter of last year.

Much of the growth was pushed by private housing developments, with 43% of building contractors reporting a rise in output during the quarter.

Private commercial output has also performed well when compared to the second quarter of 2014, with 18% of building contractors on balance reported that output increased, while enquiries increased during the quarter for 28% of SMEs and 43% of specialist contractors.

Dr Noble Francis, Economics Director at the Construction Products Association (CPA), commented on the latest results. He said: “Firms across the whole construction supply chain, including building contractors, SMEs, specialist contractors, civil engineers and product manufacturers all reported rises in output during Q2.

“Continuing the trend since recovery emerged since mid-2013, growth in output was led by the private housing sector, in which 43% of firms, on balance, reported a rise in output.

“Increased output was also reported in private commercial, the largest construction sector, where 18% of firms, on balance, reported rising volumes of offices and retail work. Contractors reported a decline in repair and maintenance work in Q2, reflecting a drop-off in measures installed under government schemes to boost energy efficiency in recent months.

“The £23Bn R&M sector will undoubtedly be affected by this and the government’s decision to close the Green Deal last month. Contractors reported a broad fall in orders across all sectors in Q2, however, not just for R&M.

“This will be countered to some extent by the fact that civil engineers, specialist contractors and SMEs reported an increase in new enquiries or orders in the quarter, whilst product manufacturers were upbeat over the outlook for sales.”

However, a “lingering concern” is the ability of the industry to be able to manage higher workloads in the face of a shortage of skilled workers.

In the last quarter, 49% of large contractors reported difficulties in recruiting bricklayers, 45% had problems hiring plasterers and for carpenters, that number was 50%.

Dr Francis added: “Of lingering concern, nine quarters of rising construction activity and expectations of higher workloads over the coming year raise the issue of whether the supply of skilled labour will meet demand. Half of contractors have already reported difficulties recruiting on-site traders such as carpenters, bricklayers and plasterers.”

The National Federation of Builders’ Chief Executive, Richard Beresford, highlighted the skills shortage.

“The severity of the skills shortage is such that the industry will see unsustainable rising labour costs or an increasing inability to deliver work,” he said.

“Industry’s efforts to address skills shortages cannot take effect soon enough.”

Despite the fears around the skills shortage, the industry in general remains positive. The CFO at Hope Construction Materials, Dallas Taylor, told UK Construction Media after the publication of the latest GDP figures that the Company has experienced solid growth nationally.

He said: “At the moment, we’re busy at the majority of our plants, but we’re not complacent and we’ll remain agile to respond quickly to any changes across our customer base.”

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