A continued contraction in construction output causes concern
This month sees little improvement in industry confidence with no resolution over Brexit on the horizon.
Despite an uncertain start for the industry in 2019, we have recently heard positive news of a major new construction project for the City of London. Plans for an innovative new skyscraper have recently been approved by the City of London Corporation.
The building which is nicknamed ‘The Tulip’ because of its distinctive bulb like form, has been designed by Foster & Partners. The size and shape of the building has proved controversial – when complete it will be 305m high, making it the second highest building in Western Europe after its South London neighbour, The Shard.
Despite ongoing fears of a slowdown in the construction industry, thanks in large part to Brexit uncertainty, there are a number of iconic projects already in the pipeline for the London skyline which are either moving ahead or waiting approval for the near future. Despite some mixed news related to the London housing market, the go ahead for The Tulip is a thumbs up for a major commercial project in the capital.
The weather effect
As we know from our ongoing analysis of trends in the UK construction industry, the weather can have a major impact on the health of the sector.
Poor weather is likely to affect both sentiment and physical construction activity. Unfortunately, our brief spell of early Spring good weather was not enough to boost the industry construction figures into positive territory.
Recent figures have shown a second month of contraction in the UK construction industry following the run of relatively positive output figures that we saw in 2018 (with the exception of the ‘Beast from the East’ blip at the start of the year – that weather affect again!).
This month’s IHS Markit/CIPS UK Construction Output survey put the index at 49.7. This was at least marginally better than the results reported for the previous month which we highlighted in our March blog. However, at below 50, this indicates that the industry remains in contraction, for the second month in a row.
What was the picture for each of the industry sectors?
A small amount of growth in house building could not make up for the bad news from both the commercial and civil engineering sectors. The worst area of the three was commercial construction which saw its greatest drop in activity since March of last year.
Commentary from IHS Markit/CIPS UK described this as a ‘recent soft patch’. General business uncertainty had slightly improved following the very negative feelings early in the year, but was generally subdued compared to the norm and the survey recorded only a very small increase in new business and employment figures over all.
Political uncertainty was once again cited as contributing to a lack of confidence and ‘indecisiveness’ is the current state of play on a number of major projects. Confidence in the industry as a whole and the UK economy in general is vitally important to ensure that planned multi million pound commercial and civil engineering projects continue to move ahead.
In common with most industries in the UK – a decisive plan for the way forward on Brexit (when that comes!) will certainly help to boost confidence.
As many projects are a long time in the planning stages – the industry remains busy with demand for quality workers continuing to be the case.
If you are a client looking for quality personnel, call us today and if you are a construction professional looking for the next step in your construction career – register online for the very best opportunities.