RedRock Construction Industry Outlook – March 2020

A brief rally for the industry is overtaken by global events

So where are we now?

As we like to do every month, this March we have taken a close look at the IHS Markit/CIPS UK Construction index update. This survey is an excellent way to test the temperature of the UK construction industry on a month by month basis.

This month the perspective is slightly different, because the update was published on 3rd March, when the UK and indeed the entire world were facing a very different set of circumstances to the ones we are now.

The situation at the beginning of March

Looking back to the beginning of the month, there was quite a positive picture.

The UK construction industry was in a positive place at the beginning of the month

Feedback from industry respondents pointed to the sharpest rise in construction output since December 2018.

There was good evidence to show that following the resolution of the Brexit impasse of 2019, plus the government’s stated commitment to major investment in infrastructure, that the sector may have been returning to a spring in its step just in time for the Spring.

The government has pledged to invest in major infrastructure projects

The survey also pointed to the sharpest rise in new orders since 2015, so there was also the prospect of lots more activity to come.

The index measure was 52.6 (compared to 48.4 the previous month), tipping the industry into the above 50 territory, indicating growth across the sector.

Respondents were seeing increased demand in both the house building and commercial sectors. The only negative was that the poor weather had caused some project delays but all in all there was a general feeling that everything was returning to a normal, more positive status.

A more positive outlook

Where are we now?

Of course, no one could have anticipated the colossal impact of the global coronavirus pandemic and the consequent major impact on all areas of industry and the wider economy.

The coronavirus has affected all industry, including construction

The current advice from government (at time of writing and changing on a daily basis) is that major construction projects can continue. However, it is not yet clear how long this will last

An article from Design & Build network.com, has noted the devastating impact on the construction industry of Hubei province in China, where the virus originated.

Likewise in Italy, the country which has seen the next greatest affect, there has also been a sharp drop in construction activity. All construction in Lombardy, the worst affected region has been halted to help control the spread of the disease, although vital infrastructure projects including roads and hospitals have been allowed to continue.

Key infrastructure projects in Italy are continuing

The situation in the UK

The decision by the UK government to allow construction projects to proceed,  has caused some consternation.

There are fears that construction workers will find it difficult to adequately socially distance on site, plus there is the potential wider impact of people travelling to and from work, and the possibility of building site injuries adding additional strain on an already stretched NHS.

Construction site injuries may add extra strain on the NHS

The Sun recently featured a plea from a trauma surgeon who said that medics may not be able to patch up or do the ‘heroic salvage of limbs’ which is required after some building site injuries.

Some contractors have closed their sites for these reasons including Transport for London and Crossrail.

The future

The current situation is likely to last some time, particularly with so many different elements affected including supply chains, tendering processes and the movement of workers.  This could lead to an impact on the industry for some months to come.

It is unclear how long the current situation will last

The good news if there is any will be that the government is likely to prioritise investment on infrastructure when we return to normality in order to help to stimulate the overall economy.

For now it is a waiting game to see how long this highly unprecedented situation will last.

Find out more about us or get in touch for further information. 

 

RedRock Construction Industry Outlook – February 2020

How is the construction industry faring as we move into 2020?

Latest construction output figures are more optimistic

We are now firmly into 2020 and another month means another set of construction output figures.

The good news from the most recent IHS Markit/CIPS UK Construction index update, is that there are some green shoots of positivity, with output falling at its slowest rate since May of last year.

Some signs of positivity

Our regular readers will remember that the latter part of 2019 saw major falls in output as a result of ongoing political uncertainty.  Anecdotal feedback this month points towards the level of new orders stabilising and a tentatively more positive attitude (the most optimistic since Spring 2018) thanks to a stabilisation of the political environment following last year’s General Election result.

Still below ‘no change’

As we have discussed before, the ‘no change’ output level is 50 so ideally the index would be above this to indicate an expansion across the sector.

The latest figure of at 48.44 remains below that level but shows a notable improvement on last month’s 44.4 and was better than the analysts’ prediction of 46.6.

House building leads the way (again)

It was not a surprise to industry watchers to see that house building was the best performing sector. The new Prime Minister, Boris Johnson, has pledged to cut red tape in a bid to support increased house building across the UK.

House building remains the strongest sector

This positive news was echoed in the latest analysis of UK house prices from the Halifax which indicated a ‘modest’ increase in prices along with a number of market indicators showing general signs of of improvement.

Increased prices lead to increased demand, and this has a positive impact on the likelihood of house building projects moving ahead.

Commercial & Civil Engineering Activity

Commercial activity had also fallen in this month’s survey but at a lower rate than in previous months.

Commercial construction output fell at a lower rate than previous months

Civil engineering was once again the worst performing sector. This is hardly a surprise when we consider the long lead times and tendering process required for these major projects.

It is likely that any more positive or optimistic sentiments across the industry will take longer to filter into this sector.

Infrastructure update: HS2 and Heathrow

Companies working in the areas civil engineering and infrastructure are likely to take comfort from the recent confirmation from the government that the HS2 High Speed Rail project will go ahead.

The Prime Minister has agreed to the continuation of the project following the recommendation from the recent Oakervee review which advocated moving ahead. However, he wants better oversight and management from central government to control the project and manage ‘exploding’ costs.

It had been estimated that it would have cost the treasury £12bn to cancel the project as well as leaving a major infrastructure vacuum that would have been difficult to fill.

How about Heathrow?

There is no current update on when the expansion of Heathrow might go ahead. The project was officially approved by MPs in 2018 but the new Prime Minister has always been opposed to it, dating back to the time when he was London mayor. He has recently been quoted as saying that he sees no immediate prospect of the expansion moving ahead.

The project was supposed to be complete by the end of 2026 but has been pushed back, probably to to 2028 or 2029 following the Civil Aviation Authority’s recent refusal to approve Heathrow’s request to vastly increase expenditure on the initiative.

There were concerns that these costs may be passed on to passengers if the project ultimately doesn’t go ahead

Our view

Good quality construction skills remain in demand across London and the South East.

Our expertise in all sectors of the construction industry mean that we are able to provide the best support to our clients for their projects. If you need experienced professionals for your development – we have immediate access to the best skills.

Register your details or contact us today for more information.

 

RedRock Construction Industry Outlook – January 2020

The UK Construction Industry looks forward to a new decade

Can the sector leave the ups and downs of 2019 behind?

In our December blog we looked back over the previous year and the highs and lows that were experienced by the industry throughout 2019.

Our regular readers will remember that it was something of a mixed year with industry sentiment wavering during 12 months of political uncertainty.

RedRock Construction Industry Outlook January
Time for New Year’s Resolutions

In January we customarily think about our New Year’s resolutions and we are even more likely to consider the future as we embark on a new decade. Inevitably we need to look back at the end of last year to set the scene for 2020.

The latest construction output update

Updated on a monthly basis, the most recently published construction industry output figures from IHS Markit/CIPS revealed that construction output fell for the 8th consecutive month last month.

RedRock Construction Industry Outlook January. Our latest views
Another fall in construction output

Respondents cited the all too familiar ongoing political uncertainty as being a major contributor, along with subdued client demand ahead of the general election.

The index score was 44.4 which was lower than last month’s 45.3. The survey also reflected the longest ongoing period of falling activity for a decade.

Civil Engineering fares the worst

The drop was across all sectors but once again, Civil Engineering was the area that saw the worst performance.

RedRock Construction Industry Outlook January. All of the most recent developments
The Civil Engineering sector was the worst affected in the most recent figures

Our regular readers will know that 2019 saw many major infrastructure projects put on hold because of the uncertain political environment.

This month’s feedback from respondents indicated that contracts for these sorts of projects were not being awarded. This had resulted in limbo for many projects and major infrastructure developments.

RedRock Construction Industry Outlook January. Feedback from the experts
Major infrastructure projects have been in limbo

It is no surprise that activity dipped ahead of the general election. The potential for a change of government and subsequent altered national priorities was inevitably going to cause a pause for anyone considering a major new construction project.

However, this time around the situation was further exacerbated by the hoped-for resolution of the Brexit impasse, which was very much dependent on which party won the election.

In addition to the woes for the civil engineering sector, commercial work also saw a dip which was directly linked to a general unwillingness to move ahead before the election results were known.

RedRock Construction Industry Outlook January. Our view on commercial construction
The commercial construction sector is also less than buoyant

Although it was the most robust sector throughout 2019, there was also a notable drop in house building activity. To add insult to injury the industry also experienced increased costs in fuel and energy prices at the end of the year.

How about the future?

Despite this, anecdotal feedback did indicate that there was a feeling of more optimism for 2020 – with an outcome to the Brexit situation being paramount and a clearer national picture with a majority government in place.

Industry respondents felt better than they did in the summer when confidence was at an all time low.

RedRock Construction Industry Outlook January. A more positive outlook for the new year?
More optimism for the sector in 2020?

Our view

Despite the political uncertainty of last year, projects are going ahead and there continues to be a demand for experienced and quality construction professionals for a range of construction requirements throughout London and the South East.

RedRock Construction Industry Outlook January. Get in touch for more info
Quality support for our clients

We are also delighted to continue to support our clients with a range of civil engineering, commercial and house building construction requirements so if you need experienced professionals for your project – we will be delighted to help.

Register your details or contact us today for more information.

RedRock Construction Industry Outlook – December 2019

Taking a look back at 2019

How has the construction industry fared this year?

As we come to the end of 2019 we always like to pause and take stock of the past 12 months.

At the end of last year we were looking back on 2018 as something of a mixed year. It is difficult to believe that the ‘Beast from the East’ weather conditions which had such an impact on the industry were nearly two years ago? Let’s hope for more clement conditions as we move into 2020!

The benefits of hindsight

Looking back at last December it is interesting to note that at that point, the country was preparing for Brexit in March.

To Brexit or not to Brexit – that has been the question

Little did we know that 12 months later, the UK would still be in the EU.

It is also important to note that how much uncertainty has been caused by the lack of a clear plan throughout 2019 and how this has hung over activity in the construction industry.

How the year has panned-out

Our regular readers will remember that we started 2019 with a relatively healthy output measure for the industry at 52.8 (reflecting the end of 2018).

It was also reported at the beginning of the year that business optimism was robust. This positive sentiment was not destined to persist.

At the start of the year, a number of major infrastructure projects: HS2, Crossrail and Heathrow expansion were reasons for the construction industry to feel cheerful.

Here we are at the end of the year and the futures of both HS2 and Heathrow are unclear, with the former on hold and no decision having been made about the latter.

The industry is waiting to see when Heathrow expansion will move ahead

Despite the construction output figure for January starting the year on a positive note,  as soon as we moved into February, there were signs of a ‘significant slowdown’ and when our outlook was published in March the outcome of Brexit was still unclear, despite the leave date being at the end of that month.

This was the month where our favourite word of the year; ‘uncertainty’ really began to creep in to the narrative.

House building has been healthier during the year than civil or commercial building

As we mentioned in our June blog – if you had travelled back in time to the beginning of 2019, what reaction would you have got from people if you told them that in the summer, the UK would still be part of the EU and that the mechanism for leaving would be no clearer than it had been in December 2018? They would probably think you were mad!

Certainty at last?

Whatever your individual perspective on Brexit – at least there is now more certainty following the General Election on 12th December and Boris Johnson’s pledge to ‘Get Brexit Done’.

The UK will leave the EU at the end of January next year and although the exact future relationship with the EU remains unclear, this future direction will hopefully help the construction industry to feel more confident about embarking on major projects next year.

The new government has also pledged to invest in the country’s infrastructure so along with other industry watchers, we wait with anticipation for the go-ahead on some big projects next year.

A more cheerful outlook for the industry in 2020?

We urge you to continue reading our blogs throughout 2020 and we look forward to a successful year of certainty for the UK construction industry.

Looking for a new role or looking to recruit in 2020?

A new decade is a great time to look for a new role. If you are planning to look for a new job in construction in 2020 – register online with us today:

AND if you are planning a new project and are looking to recruit – please get in touch with us as we will be delighted to help. 

Finally, we would like to wish all of our clients and candidates a very Happy Christmas and a Prosperous New Year from everyone at RedRock Recruitment. We look forward to working with you again in 2020.

RedRock Construction Industry Outlook – November 2019

‘Sustained decline’ is the continuing picture this month, although the construction output index figure is up from October

Contractors battle for projects with low pricing

Another month/another set of construction industry output figures, and it will be no surprise to any of our readers that there are few reasons to feel particularly optimistic as we head towards the end of 2019.

Looking towards the General Election in December

The most recent update from IHS Markit/CIPS shows a fall in UK construction output for the sixth successive month.

If there was any good news to be found in the latest figures, it was that the index figure of 44.2 was up from the previous month’s 43.3, meaning that the rate of fall was slower than had been seen in previous months. Also, despite a drop in new orders for the seventh month in a row, the actual rate of decline was at its lowest since July.

However, the accompanying commentary described the situation as a ‘sustained decline’ which is hardly a surprise following another month of UK political limbo in the UK. The latest Brexit deadline of 31st October has passed, once again, without the country leaving the EU. This has prolonged a mood of uncertainty in all areas of the economy, including construction.

Workforce numbers

Another worrying takeaway from this month’s output commentary was that construction firms are continuing to reduce their workforce numbers because projects are not getting started. Earlier in the year, there had been indications that some firms had been holding on to valuable personnel, in the hope that the situation would improve. Clearly this is a situation which cannot be sustained indefinitely.

A damp October also affects activity

Survey respondents also cited the extremely wet weather in October as having had a (literally) dampening effect on activity.

We have seen in the past how inclement weather can have a major impact on activity so it is particularly unwelcome at an already challenging time.

Rain, rain, go away!

Increased competition

It was also noted that the current feeling of uncertainty and consequent lack of new projects had led to increased competition across the sector as well as price discounting in order to secure any attractive contracts.

This was referred to in a recent article from the Construction Index as ‘suicide bidding’ meaning that contractors have been prepared to take on work which could ultimately see little or sometimes no profit in order to keep active. Building.co.uk referred to ‘panicked’ firms using ‘cut throat bidding’ in an effort to stockpile contracts.

Stagnant Civil Engineering

Civil engineering saw the fastest pace of decline in this month’s figures, echoing wider concerns about the status of a number of the UK’s highest profile infrastructure projects.

As highlighted in an article in the Guardian online, the current political impasse over Brexit means that these major infrastructure projects are simply not a focus for the government in the current environment.

As we have mentioned in previous blogs, the major HS2 project is on hold and under review, and there is ongoing uncertainty over other major projects like the third runway at Heathrow.

The forthcoming  UK General Election on 12th December means that no new decisions will be made until the elected government is firmly in place.

The status of the UK’s exit from the EU (currently) scheduled for 31st of January is similarly precarious.

This date, the manner of departure, and indeed whether it happens at all are highly dependent on the make-up of the new government, which will be formed this year but is unlikely to be getting down to any very serious business until 2020.

Which party will be running the country after 12th December?

Commercial property

In another survey recently published by RICS there are signs of unease in the Commercial property sector. If you remember, we looked at the latest update from RICS last month in relation to the residential housing market.

It is helpful to keep an eye on the property market in the UK as this is directly linked to stimulus to build more housing and commercial buildings.

This latest report showed the highest number of respondents who felt that the commercial property market is in a downturn phase. This was despite the fact that the underlying view is that capital value expectations remain positive over the longer term. Another indication that the economy is basically waiting for a clearer idea of the future across all sectors.

Anecdotal evidence implies that the Brexit situation has had a similar impact on commercial property, with general hesitancy leading to ongoing caution and an unwillingness to commit to big projects which involve major expenditure. The commercial sector is similar to the civil engineering sector in that major investment is required before projects can progress.

Our view

‘All eyes’ are currently on the December general election – with the fervent hope that the emerging new administration will be able to provide a clear future direction. Along with most industry players, we continue to watch this space to find out what happens next.

If you are looking for a new role in construction, or are planning a project and hoping to hire in the near future – we can help.

Get in touch with us today or register online. We look forward to hearing from you.

RedRock Construction Industry Outlook – October 2019

No sign of a major upturn for the industry this October

The unresolved Brexit situation prolongs feelings of uncertainty in the sector

The headline of the latest IHS Markit/CIPS UK Construction Output survey figures is the somewhat alarming:

‘Activity declines at second sharpest rate since 2009’.

Although this is a monthly update, it comes at the end of the third quarter so it is always interesting to take stock at these key points in the year.

The index figure of 43.3 was markedly down on last month’s 45.0 figure (anything below 50 indicates contraction in the industry) and was below the 45.0 level that had also been anticipated by analysts.

Of the three individual sectors, commercial activity performed the worst, civil engineering had also dropped sharply and residential building registered a decrease in activity for the fourth month running.

Builder On Building Site Discussing Work With Apprentice

Feedback from survey respondents cited Brexit and general economic uncertainty as the main reasons why major projects weren’t going ahead. This is the consistent message that has been coming from industry participants over the last few months.

More positivity for the future?

On a more positive note, although respondents reported that business confidence was generally weak there was mild optimism that the picture would improve over the next 12 months, presumably with the hope that the Brexit stalemate will be resolved (although how this will happen is not yet clear).

However, this month respondents also reported a drop in staffing levels – the strongest fall in numbers since 2010.

Update from the Construction Products Association

In another recent update the Construction Products Association (CPA) has downgraded its industry predictions for the next 12 months. The CPA acts as the voice and campaigner for construction product manufacturers and distributors across the industry.

Construction skills shortage managed by a brickie visa?

In the summer the organisation had been predicting 2020 and 2021 growth across the industry of 1% and 1.4% respectively. This has now been adjusted down to 0.5% and 0.9%.

Three factors were cited; the possible impact of the government’s recently announced review of the major HS2 project (which may result in delay, downgrade or even cancellation), cost overruns at Hinkley Point C and uncertainty over the UK’s departure from the EU.

These aspects, and particularly the Brexit situation, have led to a lack of investment in new infrastructure, office space and house building.

Concerns in the housing market

In its most recent residential survey for September, the Royal Institute of Chartered Surveyors (RICS) has said that the ‘Brexit impasse’ is preventing people from selling their homes with the market remaining ‘subdued’.

The September figures showed that nationwide sales had reduced and new instructions were slipping. Listings coming on to the market had fallen for the first time in 4 months.

Construction industry watchers keep a close eye on the housing market because an increase or decrease in demand for housing has a direct affect on the likelihood that new houses will need to be built.

Anecdotal feedback was that a combination of both economic and political uncertainty are making people hesitate before selling or buying and the ‘Brexit effect’ is more marked in the South East than regionally.

On a more positive note there was a general feeling that the situation would improve over the coming year. Clearly this is another sector that is hoping for a resolution to Brexit as soon as possible

Construction in the Queen’s Speech?

As reported on Building.co.uk the Queen’s speech was delivered on 14th October. The speech outlines the government’s plans for the coming term of parliament and although the nation is currently in a state of political uncertainty, it still provides a useful outline of current intentions.

Industry watchers had been hoping for a mention of the HS2 project (see the CPA section above) as the current government review has made its future seem uncertain, but it wasn’t included in the speech (although it was addressed in the 2017 speech and it did at least make a very small appearance in this year’s briefing notes).

Aerial view of Leeds City centre with main train station ready for stage two of the HS2 project

There was also no reference to any plans to address the nation’s housing shortage. It had been hoped that the government might be intending to continue to offer assistance to first time buyers to help the sector, which in turn would encourage house building projects to go ahead.

One area of interest that was covered was the government’s intention to introduce improved building safety standards and create a new building safety regulator. This plan has emerged as a direct response to the Grenfell tragedy.

The speech also echoed the chancellor’s earlier pledge to improve the nation’s infrastructure (see our September blog) in a National Infrastructure Strategy focused on digital, transport and energy infrastructure.

Our view

Times when the industry faces challenges are when the team at RedRock Recruitment thrives, because of our proven professional methodology and the quality of our personnel and high levels of customer service.

If you are looking for a new role in construction, or are planning a project and hoping to hire in the near future – we can help. Get in touch with us today or register online.


We will be delighted to help.

RedRock Construction Industry Outlook – September 2019

Hesitancy persists with major projects remaining on hold

Not much change for the industry in stagnant September?

Autumn is approaching

As we head into the Autumn is it possible to detect any hopeful signs of a change to the pessimistic mood which has haunted the construction sector during recent months?

The short answer is  ‘no’ as the broader listless political and economic status quo remains in the UK, with very few people willing to take a firm bet on the chances of the country exiting the EU on 31st October as planned.

Indeed the recent monthly construction output figures from IHS Markit/CIPS caused some alarm in the industry with the sharpest reduction in new work since March 2009 and a decline in business activity for the 4th month in a row.

The index was at 45 in August down very slightly from the 45.3 seen in the previous month. If there is any comfort in this month’s update, it is that there wasn’t a greater drop.

However this keeps the index figure at below 50 for the fourth consecutive month, indicating a contraction in activity.

Feedback from participants indicated poor order books and the general lack of new projects either moving forward or even on the horizon. All three construction categories (commercial, infrastructure and house building) decreased.

Commercial building saw the greatest negative impact, although a chink of positive light was that house building only saw a very slight downturn. Brexit uncertainty was once again cited as the reason for lack of confidence with his situation likely to persist until the way forward is clear.

Good news for employment?

Despite this, employment trends in this month’s update were relatively resilient.

It was noted that there was a marginal drop in staffing levels across the UK, but the reality seems to be that companies are holding onto their skilled staff with reductions being managed by non replacement of voluntary leavers.

In reality, rather than a true downturn, the industry is actually in limbo. Clearly large firms are holding on to skilled staff and hoping that once Brexit is resolved, things will improve with delayed projects starting to move forward.

Good news for infrastructure?

Also featured in the news in September was the new Chancellor, Sajid Javid’s spending review statement which he delivered earlier in the month.

Although much of the detail was drowned out by other political happenings the review did promise an ‘infrastructure revolution’ with a pledge to commit to major investment in the country’s infrastructure with a particular focus on transport and energy efficiency.

The plans were broadly welcomed by the National Infrastructure Commission with a note of caution that a true long term plan must be established to support infrastructure into the future.

It is exactly these sorts of major projects that are currently facing delays so increased activity in this area would be greatly welcomed by construction firms and provide a much needed boost to the industry.

For the time being though, we will wait and see how activity progresses.

How about house building?

One of the major construction sectors is house building so it is always helpful to keep an eye on house prices in the UK as they have a direct impact on demand for new housing.

The most recent survey from the Halifax published in August described house prices in the UK as ‘resilient’ with a 0.3% rise in prices – the second month in a row to see a rise.

In the commentary Halifax said that despite evidence of economic uncertainty having a negative effect on consumer sentiment, house affordability and levels of employment remain positive, so this is continuing to sustain the housing market.

Also, Barratt the UK’s biggest house builder has recently posted an 8.9% rise in pre tax profits to £910m – whilst also warning that 2019 sales are slower than had been expected.

Average selling price dropped and sales in the capital were flat but sales outside of London rose and the company sold a total of 17865 new homes up from 17579 in 2018. 40% of sales had been supported by the government’s ‘Help to Buy’ scheme which is designed to make the property market accessible to first time buyers.

Despite general gloomy sentiment it is positive to see that demand for new housing continues as this will inevitably support activity in this sector of the industry.

Our view

As experts in the construction industry we fully understand the current challenges, but at RedRock we continue to see demand for skilled and qualified construction workers for a range of different projects.

If you are looking for a new role, or are hoping to hire in the near future – get in touch with us today or register online. We will be delighted to help.

 

RedRock Construction Industry Outlook – August 2019

A gloomy mood continues to hang over the industry

Hesitancy persists for many major construction projects and developments

The ongoing lack of resolution to the UK’s Brexit woes is increasing fear that the UK economy as a whole is becoming subdued.

So it is no surprise that our update for construction activity in August reflects the general lack of forward momentum which is paralysing a number of different UK industries.

RedRock Construction Industry Outlook - August

The latest Markit/CIPS Index figures have shown an overall fall in UK construction output for the third month in a row. Both civil engineering and commercial work continued to see a downturn and new orders experienced a notable drop which was attributed to a lack of action across the sector because of Brexit. House building also fell but not by as much as the shock result of last month.

The overall score for the index was 45.3 – better than last month but well off the 50.0 which indicates that the industry is holding steady (or expanding when above that level).

Commentary from Markit indicated that analysts are not anticipating an imminent turnaround, and that a downward trajectory is likely to continue.

The survey also noted that the situation may be exacerbated by the scheduled October VAT changes which will affect the cash flow that some construction firms have available to support new work.

Read our RedRock Construction Industry Outlook - August

Under current rules suppliers are required to account for their own VAT but in a new effort to avoid fraud the government is requiring some firms to make the payment direct to HMRC.

Find out more on the UK Gov website.

Further downbeat news from the UK’s mineral producers

Meanwhile another survey issued in August also points to a creeping slowdown across the industry.

The Mineral Products Association has recently published its own data for the first half of 2019 for the aggregates market; crushed rock, sand, gravel, asphalt and ready-mixed concrete (RMC).

Our views in our RedRock Construction Industry Outlook - August
These raw materials are used by the construction industry across all sectors, so increases or decreases in demand provide a good guide to the level of activity across the board.

Sales volumes of aggregates in the first half of 2019 were 1.9% lower than the same period last year, indicating a reduction in demand for these materials. As the MPA points out – these heavy materials tend to be used in the early stages of construction projects so decreased demand indicates that projects are not getting started.

Only mortar sales, which are more closely linked to house building, saw a rise at 1.4% higher in the first half of the year compared to the same period in 2018. As we have seen in our blogs this year, house building has been the one sector that has bucked the downward trend when compared to the civil engineering and commercial sectors, although this has not been the case over the last two months.

Find out the latest in the RedRock Construction Industry Outlook - August

How are construction firms feeling?

The Guardian has looked at a series of different industry sectors in the UK to see how a possible recession plus the Brexit effect are impacting on day to day commercial activity.

In the construction sector they spoke to a building firm in Sutton in South London which carries out renovations and loft conversions and has 6 office staff and 25 onsite contractors. The article is well worth a read for an on-the-ground perspective. 

How is the industry faring this month? Find out in the RedRock Construction Industry Outlook - August

This company is looking to diversify its activities in order to weather a possible recession but one of their most pressing issues is the uncertainty about European workers’ future status following Brexit. This has led to many of their Eastern European workers returning home – particularly to Poland where the economy is relatively strong.

The lack of clarity over the future status of European construction professionals who want to work in the UK continues to be a problem for the industry which may find it increasingly difficult to recruit skilled workers for a range of construction requirements.

Looking for work or planning to hire quality construction workers?

RedRock Construction can help!

Get in touch with us or REGISTER ONLINE today.

RedRock Construction Industry Outlook – July 2019

Negative news overshadows the industry in July

The risk averse sector is too nervous to move ahead with major projects

A general slowdown in the UK economy and the ongoing lack of resolution over the nation’s Brexit situation has led to the worst drop in construction output seen by the industry in a decade.

As regular readers will know, general sentiment over recent months has been far from positive with lots of companies taking a ‘wait and see’ attitude to projects – particularly major expensive ones.

Many commentators have been on tenterhooks for a while, wondering when those feelings of ‘uncertainty’ might tip over into ‘negativity’. This is the month where that seems to have finally happened.

The July IHS Markit/CIPS Construction Purchasing Managers Index belly flopped to 43.1- considerably below the 49.3 figure that had been predicted by analysts and providing a stark reminder of the profound uneasiness of the sector in our current Brexit limbo.

As we have discussed before, a figure below 50 shows a contraction in the industry and not only was this month’s figure well below that, but it was also at the lowest level that had been seen since April 2009 and the depths of the financial crisis.

Respondents reported that clients were unsure about proceeding with major projects which is hardly a surprise under current circumstances. The drop was experienced in both business activity and reports of new work.

In previous months the commercial and civil engineering sectors had been most affected but this month the gloom has also spread to housebuilding with negative figures reported across the whole industry.

Activity in housebuilding saw a drop for the first time in over a year and it was the largest drop in activity for three years. Commercial work remained the weakest area overall, with a fall for the sixth consecutive month.

 

According to an article in the Guardian the combination of no clear way forward and the growing possibilities of either a Labour victory in a snap autumn general election or a no deal Brexit was keeping major infrastructure projects on hold.

More positive news on staff retention

The demand for construction staff remained stable which is good news. This may reflect the industry’s hope that this period is a blip and we can look forward to more certainty soon. Although business optimism is subdued respondents did report that they are holding on to their staff whilst looking forward to things improving. Few layoffs were reported with companies not replacing workers who had left, but retaining the skilled people already in place.

Will the new Prime Minister make a difference?

Will our new PM, Boris Johnson be able to really make a difference to sentiment across the sector? The reality is that we can’t yet be sure. He has indicated his intention for the country to leave the EU on 31st October so this can raise the stakes on a no deal Brexit but at the same time he is committed to getting an agreeable deal into place with the EU. It is also a case of ‘wait and see’ for some UK infrastructure projects from the new PM who has taken an equivocal stance on both HS2 and Heathrow expansion during his campaign.

 

Hopefully things will be clearer soon – but for the time being at least, the uncertainty is likely to remain.

Need more information?

If you are recruiting specialist construction personnel or are looking for your next role – get in touch with us.

OR Register your CV today:

RedRock Construction Industry Outlook – June 2019

This month sees a setback for the sector

The positive news from last month is overshadowed by increased uncertainty in June

If we could travel back in time to the beginning of the year and ask people how they thought 2019 would pan out from an economic and political perspective, it is unlikely that many would have predicted that come June, the UK would still be in the EU, that the country would have recently held its European Parliamentary elections, and that we would be in the midst of the competition to find a new Prime Minister.

However, ‘here we are’ and the political uncertainty which has remained a major theme so far in 2019 is still with us. Inevitably this continues to have an impact on lots of commercial activity throughout the UK – and not least on the construction industry.

An article in the Guardian on the 4th June highlights the ‘mothballing’ of major commercial and civil engineering projects as Brexit uncertainty hangs over the UK construction sector.

The article reflects the sentiment from the most recent IHS Markit/CIPS UK Construction Purchasing Managers’ Index which has shown that of the three major sectors – house building, commercial projects and civil engineering – only house building saw an expansion in activity last month.

This was not enough to make up for the slowdown in both the commercial building and civil engineering sectors, the former being the weakest with the greatest fall since the Autumn of 2017 and the latter seeing 4 consecutive monthly falls in activity.

Feedback indicates a contraction in June

The index figure for this month was 48.6 which means a contraction in the industry overall, and it was also below the forecast of 50.5.

If you remember from our last blog, there had been a small rally for the industry in May, with the figure just tipping into positive territory at 50.5. Accompanying commentary for the most recent figures points to the fact that both output and new orders declined this month at the highest rate since the first quarter of 2018. The reason? Our old friend ‘uncertainty’ was seen as responsible, leading to delayed decision making over expenditure on major new projects.

RedRock Construction Outlook November

As nobody is entirely sure what happens next with Brexit or who the new Prime Minister will be and what his manifesto will be, this is hardly a surprise.

With no solution on the horizon it is likely that this situation will persist. Major construction projects take a long time to ramp up even in the best of circumstances, so it is likely to be a while before the sector gets up to speed again.

The outlook for construction workers

Respondents to the survey also said that in some cases they were starting to take a more cautious approach with their recruitment strategies and weren’t moving quite so quickly to replace staff who had left. This resulted in the sharpest drop in employment in the sector for more than six years.

It has already been acknowledged that Brexit (even when it happens) has the potential to have a direct affect on the supply of skilled labour.

In an article in February the Institute of Civil Engineers (ICE) estimated that the UK construction industry needs 124000 new engineers and technicians every year.

Inevitably some of these people would normally come from the EU so the ongoing uncertainty over future arrangements really does cause problems for skilled people who want to work here and for large firms who want to hire.

Our view

As the absolute experts in construction recruitment – RedRock Recruitment are excellently placed to continue to find the right roles for in-demand people and the right skilled staff for our clients.

Get in touch today or submit your CV online. We look forward to hearing from you.