Positive news for the construction industry with better than expected growth during the second quarter of the year.
The great summer weather has continued to boost our good mood in the UK
As keen watchers of the economy know, the Bank of England raised UK interest rates in early August from 0.5% to 0.75%, signalling their view that the economy is showing signs of recovery following the knock-back caused by the poor weather at the start of the year. We have also continued to see clement weather conditions in the UK which always have a positive effect on the nation’s overall mood and inclination to spend on summer essentials!
Good news from recent construction industry data
There are also signs of a boost for the construction industry with the latest figures issued by the Office for National Statistics (ONS). The ONS has recently published its Construction Output data for the second quarter of 2018. As we discussed in our last blog, the HS Markit/CIPS Construction Purchasing Managers Index for July showed reasons to feel positive about the health of the industry, and the quarterly figures from the ONS seem to echo this.
The big picture
The figures for quarter 2 showed a growth in construction output of 0.9% (£364 million in money terms) recovering from the 0.8% fall in quarter one, which had caused concern for construction industry analysts.
As we have mentioned in previous blogs, the widely held view is that the poor picture in early 2018 had mainly been caused by the extremely bad weather referred to as the ‘Beast from the East’. Although we can’t be absolutely sure that this was the main cause, the generally improving picture seems to imply it was a major factor.
Mixed results across different types of construction activity
The data showed a mixed picture for new construction work. Public new housing experienced notable growth over the three month period, and infrastructure construction increased by £111 million. Overall, however, new building output was flat because new private housing work contracted and other public work such as schools, colleges etc. continued to fall.
Most of the growth in the industry was generated from repair and maintenance activity which showed a 2.7% increase since Q1.
Backing this more positive view of the health of the construction industry, The HS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) data jumped to 55.8 in July after the 53.1 that we reported last month. This was welcome news and comprehensively beat analysts’ forecast of 52.8.
How is the ONS data gathered?
Construction output data is gathered by the ONS from monthly surveys of stakeholders in the industry, and the body uses its combined quarterly analyses to provide a comprehensive picture of trends in the industry.
The ONS defines ‘output’ in the following way:
“Output is defined as the amount chargeable to customers for building and civil engineering work done in the relevant period excluding Value Added Tax (VAT) and payments to sub-contractors.”
Our verdict: Healthy signs for the industry are keeping us very busy!
At RedRock, we aren’t surprised by these figures as we continue to see a strong demand for experienced and skilled professionals for a wide range of construction requirements.
Despite ongoing fears around the uncertainty of the looming Brexit, which had been anticipated to have a dampening effect on construction work, we continue to see lots of new projects in London and throughout the South East, along with the usual repair, refurbishment and maintenance contracts continuing as well.
We make it our business to monitor developments in the industry as a whole – so we are always excellently placed to support clients with the right skilled personnel and to find the right positions for the professionals on our books.