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.