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.

RedRock Construction Industry Outlook – May 2019

Taking a look back at the first quarter of the year

Positive news on house building but other sectors remain subdued

Unbelievably we find ourselves in May and heading towards the summer and the midpoint of the year. With the many political upheavals during the early months of 2019, it has been difficult to paint a really clear picture of how the construction industry is faring this year. So, as our regular readers will remember, every now and again we like to take stock and look back over a quarter or more for a longer-term view.

May has seen the publication of the official Office for National Statistics Construction Output figures which cover UK construction industry activity during the first quarter of 2019.

So – what have we learned from the latest ONS update? The figures for new work reflect the somewhat lacklustre picture that we have seen in our monthly blogs during the first quarter of the year with 0% growth over these three months.

Industry output increases over the quarter

On balance though, overall industry output did increase by 1% over the quarter and this figure was driven by repair and maintenance work which increased by 2.9% (including both private housing repair and maintenance and non housing repair and maintenance). Q1 2019 fared better than the last quarter of 2018, yet the ONS commentary did state that it is difficult to reach a conclusion on a month by month basis at the moment as the figures have been so volatile.

So how good is this good news? Some industry commentators have suggested that rather than reflecting a real growth in the amount of work – the increased activity may actually reflect some companies trying to complete projects before the original Brexit date of 29th March. This means that it is probably the bleaker lack of growth in new work which is the real story of the quarter. Uncertainty over Brexit continues to cast a pall over the industry and with a delay in place which may endure into the Autumn, this situation is unlikely to improve in the very near future.

Positive news for quarterly output

Meanwhile there was slightly better news in the latest IHS Markit/CIPS UK Construction Purchasing Managers’ Index this month which tipped back into positive territory at 50.5. A figure of anything above 50 is positive and indicates growth (however small) plus this month’s output was slightly above the 50.3 that had been forecast by industry analysts.

The positive news came from a pickup in housebuilding. Both the commercial and civil engineering sectors remained subdued in the current climate of political uncertainty.

 

National House Building Council update

This positive news for house building was echoed by the NHBC (National House Building Council) which carried out its own analysis of new homes being registered in the first quarter of the year.

The number of new UK homes registered was 37500 which represented a 3% increase on the same period in 2018.

Construction skills shortage managed by a brickie visa?

It is important to remember that these figures are being compared to ‘beast from the east’ period last year which saw a reduction in construction activity due to extremely bad weather. The figures showed a decrease in private housing of 6% but this was offset by a 36% increase in the affordable and rental sector.

The NHBC commented that despite a general Brexit effect dampening the construction industry and consumer confidence, housing is still an ‘attractive asset class’ and this is why building continues to go ahead. London saw a notable 58% increase on the same time last year. This was partially due to a number of large housing schemes being registered at the beginning of 2019.

Our view

We support our clients to find the best skilled workers and capable professionals to find the right positions and we continue to see a high demand for this service. Please get in touch with us if you are looking for new staff, or register your CV today.

RedRock Construction Industry Outlook – April 2019

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.

RedRock Construction Industry Update April 2019

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.

Construction Industry Outlook April 2019

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.

RedRock Construction Industry - what's happening in April

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.

Our view

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.

RedRock Construction Industry Outlook – March 2019

March sees the first contraction in construction output since the poor weather in early 2018 

General uncertainty over the status of Brexit casts a pall over construction activity

There is no getting away from it, and as much as many of us would like to avoid any further debate on the subject, something we have to address in this month’s outlook is Brexit.

Looking back over previous editions of our monthly outlooks, this major forthcoming (we think!) change to our international relations has cropped up on a number of occasions. This month really sees it front and centre.

The dangers of uncertainty

Many industries and individual businesses are wrestling with the major  uncertainty that the ongoing political deliberations are causing. When we wrote about Brexit in our round-up of the year at the end of 2018, little did we think that in the latter half of March, we would still be wondering what will happen next.

Whether Soft Brexit, Hard Brexit, No Deal Brexit or Delayed Brexit – the lack of a single clear direction is inevitably causing a crisis of confidence in lots of different areas of business.

The construction industry is particularly vulnerable

The construction industry has always had the potential to be particularly affected by Brexit. Important relevant factors include huge projects which either move ahead or are delayed as a result of general business confidence, cross-Europe construction co-operation, the confidence of consumers (and therefore house buyers), the value of the pound and the movement of workers across Europe.

Is it any wonder that projects have been delayed whilst everyone waits to find out what the next steps will be?

Contraction in the industry

Turning to the important construction industry output figures for this month published in the IHS Markit/CIPS UK Construction Output survey, the latest index has shown a contraction in the UK construction industry for the first time following a period of 10 straight months of expansion.

The most recent output figure was at 49.5, and as we have indicated in past blogs – anything above 50, even a very small amount, indicates an expansion – below means that the industry is contracting. According to the survey the only construction category to see any growth was housing and this was described as modest. There were drops in both commercial building and civil engineering.

Feedback from industry respondents

Anecdotal feedback from respondents highlighted Brexit as the major factor affecting confidence in the industry. The view was that general political uncertainty is leading to a drop in invitations to tender.

Employment

Employment figures were not as robust as those seen at the end of 2018 but the good news is that employment creation has held steady and didn’t see any actual drop. Some companies reported that they are continuing to train staff in order to offset perceived skills shortages but at the same time the general outlook had caused some firms not to replace leavers.

The housing market

Despite the modestly positive figures for house building, there was some additional less than encouraging news in the latest RICS (The Royal Institute of Chartered Surveyors) Residential Market Survey for February 2019.

The overall results showed a decline in activity throughout the UK housing market for new buyer enquiries, instructions and agreed sales. 77% of respondents indicated that Brexit uncertainty was holding back sales activity.

The reality is that if people are not buying houses then this will apply an inevitable brake on them being built. Residential house building has traditionally been the sector that has held-up the best for the industry, when negative sentiment has affected other sorts of construction activity.

Our view

Construction activity remains busy and we are constantly on the lookout for skilled workers for our clients. At the same time we are looking forward to the resolution of the current Brexit stalemate – which we hope comes soon – and a welcome return to optimism for the UK Construction Industry.

Find out more about RedRock Recruitment – or get in touch with us if you need more information about any of our services.

RedRock Construction Industry Outlook – February 2019

A change in optimism from the end of last year

Residential house building remains the best performing sector in the latest lacklustre update on construction industry activity 

For those who regularly read our construction industry blogs, there can be no doubt that 2018 was a year of ups and downs. Most industry players and stakeholders from the wider economy have probably had their fingers crossed in the hope that 2019 might shape up to be a more consistent year.  Unfortunately, February’s construction output figures do not seem to be giving that impression.

The latest IHS Markit/CIPS UK Construction Output survey published on 4th February has shown output figures to be at a low not seen for nearly a year, in contrast to the tentative optimism that we saw in last month’s data.

The PMI index had a score of just 50.6, down from the 52.8 recorded in the previous month, indicating a marked drop in activity from the previous month. Another cause for concern was that the index was below forecast expectations of 52.6.

The Guardian Newspaper cited this as a ‘significant slow-down’ in growth, and the commentary accompanying the survey from IHS Markit/CIPS pointed towards a ‘loss of momentum’. This is probably not what most stakeholders in the industry want to hear.

New business confidence and prospects for employment

New business levels also experienced an eight month low. Respondents reported that many clients were taking a ‘wait and see’ approach to major projects which in turn was having a direct affect on employment with some projects being delayed. The feedback from respondents indicated the slowest expansion of construction employment figures for two and a half years.

The individual sectors

All three of the major construction sectors; Commercial, Civil engineering and Residential, saw weaker growth than last month.

Residential work was the strongest of the three (despite being described by the IHS Markit/CIPS commentary as ‘modest’).

Civil engineering saw a minor increase and Commercial construction was the worst performing area with a decline in commercial projects (for the first time in 10 months). This sector is most likely to be affected by a general lack of confidence in the British economy and the geopolitical environment, which still persists whilst the country awaits the outcome of the Brexit negotiations.

Residential new builds remained the strongest sector

There is no doubt that the UK needs more housing so it is positive that this sector continued to see growth, albeit less robustly than recently. The government’s Help to Buy scheme has supported the number of home purchasers in the market which in turn is likely to have had a positive impact on residential building projects going ahead.

What can we conclude?

The index is above 50 so the industry is still (just) expanding rather than contracting. The figure has remained above 50 since the major weather problems experienced in early 2018 but this is the lowest level since then.

More positively, although the construction survey respondents were feeling less optimistic than at the end of last year, the majority still reported that they expect to see output to continue to rise as the year progresses. Inevitably, uncertainty over Brexit and the ongoing fears that there may be a hard Brexit were the most commonly cited reason for projects awaiting final approval. Until this issue is resolved and the construction industry has a clear idea of the way forward, the uncertainty is likely to remain.

Looking back on last year, we know that individual ups and downs are not necessarily indicative of a consistent downwards trend. We continue to remain busy and will monitor developments in the industry closely over the coming months.

If you need high quality construction personnel for your project – get in touch with us today.

Looking for a new role? Please complete our online registration form.

RedRock Construction Industry Outlook – January 2019

Looking forward to the year ahead.

How will the industry shape-up as we move into 2019?

Following the Christmas break, January can sometimes be a shock to the system! This is often a quiet time of the year, when we like to think about the year ahead and get to work on our New Year’s Resolutions.

So how are things looking for the construction industry as we embark on 2019?

RedRock Construction Industry Outlook – January 2019

If you remember from our end of year blog, 2018 was quite a mixed year for UK construction, with some major ups and downs. As with many aspects of commercial life in the UK, the uncertainty surrounding the future direction of Brexit was casting its shadow over confidence in the industry, and the ongoing political deadlock means we are not much further forward.

That said, there are some reasons to be a little cheered by the January IHS Markit/CIPS UK Construction Purchasing Managers’ Index and output figures. The rundown to the end of the year, and the Christmas period causes a slow-down in a number of industries, so a reduction in output is never a surprise.

This month’s survey showed a fall to 52.8 in December which was slightly below the forecasted 52.9. A figure below forecast can be an indication of weakening sentiment in the industry but it is important to remember that anything above 50.0 indicates expansion, so the industry is continuing to see growth.

Looking at the detail in the commentary, the drop was in housing and ‘other commercial activity’. Although the overall output figure had dropped, there was encouraging news with stronger performance for civil engineering at the end of 2018. There was also an increase in both transport and energy projects which bucked last year’s trend for optimism about infrastructure work to be subdued by the spectre of Brexit.

RedRock Construction Industry Outlook

Interestingly the report also indicated that business optimism amongst respondents was at its highest level since April last year. According to building.co.uk there are a number of major infrastructure projects on the horizon which may have contributed to this, including HS2 and Crossrail and the country’s major airports Heathrow, Gatwick and Stansted all looking at expansion plans. The important phrase here is ‘on the horizon’. It is vitally important for the industry that these projects go ahead as planned and with minimal delay.

The UK Government Infrastructure Pipeline

There was further good news in the 2018 National Infrastructure and Construction Pipeline which was published by the government in November and which outlines £600bn which has been allotted to fund new infrastructure projects in the UK over the next 10 years.

The plan is that these projects will be undertaken with a new modern and efficient approach to construction which better reflects practices in the manufacturing industry, and will involve the construction of roads hospitals and schools.

RedRock Construction Industry Outlook – January

Our view

Despite the up and down nature of 2018, we are looking forward to a positive and busy 2019 and are continuing to see demand for high quality construction professionals for a range of building and infrastructure projects.

If you are looking for high quality personnel or for your next work opportunity, get in touch with us or browse our job opportunities today.

RedRock Construction Industry Outlook – December 2018

Looking back at the industry in 2018

In this month’s blog we are taking the time to pause and reflect on what we have learned about the health and wellbeing of the construction industry this year.

Here are some of the key themes that we have seen in 2018:

The great British weather

Weather has been a real theme for the construction industry this year and it is interesting to note how meteorological factors can have a real impact on the health of the sector.

Lukewarm construction output figures at the start of the year were blamed on the ‘beast from the east’ inclement weather conditions which brought much of the nation to a halt and which seemed to cast a pall over construction activity in the first quarter.

In stark contrast our very hot summer had the opposite effect and when combined with the football feel-good factor of England’s performance in the world cup – the whole nation was feeling cheerful. Good weather was cited by industry commentators as giving the construction industry a boost – helping it to bounce back from a weaker start in the winter.

The ‘B’ word

It is impossible not to mention Brexit as this ongoing situation has the potential to affect all aspects of the construction industry. Along with most businesses, it is the current uncertainty that construction firms are finding it difficult to deal with as this makes it tricky to plan major projects.

Anecdotal feedback in all of the surveys and analysis that we have looked at this year has highlighted Brexit as having the potential to put a temporary or permanent halt on some projects going ahead.

It has been a ‘mixed picture’ – but we are still building houses!

‘Mixed’ has been the word when looking at activity across the industry this year. Despite often favourable construction output figures and ONS updates, industry watchers have been tentative when it comes to an optimistic outlook for the sector. Political uncertainty and up and down figures have left the industry feeling not entirely confident and although there have been generally positive figures for house building and repair and maintenance work, some infrastructure projects may have been delayed with political uncertainty still a factor.

What are we expecting for 2019?

We mentioned it earlier in this blog but we have to come back to Brexit. In the summer, Construction News cited a number of potential concerns related to Brexit including availability of materials, the possibility of more red tape and a threat to the funding of some construction projects. The reality is that we have no more answers on those points than we did then. Probably the highest profile impact is likely to be on our construction workforce as the industry is very dependent on migrant workers from the continent and despite the fact that we are still waiting for ‘the deal’ there is little doubt that movement of workers will be restricted.

This has the potential to increase the cost of projects and even to delay some from going ahead. The construction industry is on tenterhooks to see how Brexit plays out and what this means for the sector as a whole in 2019 and beyond.

The good news is that skilled contractors are likely to remain in great demand if availability of personnel is limited and here at RedRock Recruitment we have access to some of the best work opportunities and projects, plus we have the right skilled workers on our books to manage all requirements.

Finally, we would like to wish everyone a very Happy Christmas and a Prosperous New Year from all At RedRock Recruitment. 

RedRock Construction Industry Outlook – November 2018

Quarterly output shows a more positive picture

Latest ONS construction output analysis is optimistic

The picture this month

In our regular industry outlook blogs, we usually look at construction statistics on a monthly basis. Analysis of outputs month by month does provide a snapshot of activity across the industry but as we ourselves have seen this year, the picture can go up and down from month to month.

So when we can, it makes sense to look at information over a longer period of time to develop a more consistent picture. You may remember that in previous blogs we have looked at construction industry analyses which are issued by the Office for National Statistics and their most recently issued figures are an assessment of the third quarter of 2018. The ONS itself indicates in its data commentary that monthly figures have the potential to be ‘volatile’ whereas the quarterly measures provide a more ‘comprehensive’ view of ‘underlying trends’.

Analysis from our RedRock Construction Outlook November

A welcome increase in construction output

We know that weather had an impact on quite a weak start to the year so the latest update and analysis from the ONS has shown a welcome indication of recovery with an increase in construction output during the third quarter of 2.1%.

The increase was generated in two main areas – new work across all sectors notably increased by 2.8% and repair and maintenance work increased by 1.%.

Read our RedRock Construction Outlook November

In terms of financial measures the value of the increase was £872 million in the third quarter when compared to the second quarter of 2018. The main growth was once again new work in the private housing sector at £507 million. Also worthy of note was non-housing repair and maintenance (an increase of £230 million) and also infrastructure construction (which increased by £191 million). The level of all work reached £13995 million which was the highest since the monthly records were first started in January 2010.

Some construction sectors did see falls in output. These were private commercial new work (£162 million), private housing repair and maintenance (a £124 million decrease) and private industrial new work (a £60 million decrease)

This is positive news but what about the outlook for construction jobs?

In another recent survey the Recruitment and Employment Confederation (REC) and KPMG index for construction staff dropped from 56.9 in September to 55.5 in October. Anything above 50 indicates growth so this figure remains healthy, but a drop shows that whilst there is a continuing growth in vacancies throughout the sector, it is happening at a slower rate.

Industry watchers have commented that despite the positive news on construction output, there is still some uncertainty in the industry, particularly because of Brexit. Inevitably, uncertainty leads to hesitation over some new projects and new hires. Until there is a very clear conclusion from the UK and EU governments, this will continue to hang over the industry.

RedRock Construction Outlook for November

Our view

At RedRock we continue to see healthy demand for skilled and qualified construction workers and we are pleased to note the positive ONS figures for the third quarter of this year.

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

RedRock Construction Industry Outlook – October 2018

Continuing evidence of a slowdown gives the construction industry pause for thought

Analysts express some concern over September figures 

The picture this month

Industry analysts have shown some concern following a continued sign of construction slowdown in the monthly figures reported in the recent IHS Markit/CIPS UK Construction Purchasing Managers’ Index.

Overall construction business increased during the month but expansion slowed for the second month in a row. This month’s figures also showed the weakest signs of growth over the past 6 months.

The headline figure for this month’s index was 52.1, versus 52.9 for last month and the industry forecast had been set at 52.8. Any figure above 50 does indicate expansion – but what is worrying industry observers is the slowdown in growth and general lack of confidence and momentum in the market.

Looking at the individual construction sectors, house building and commercial construction continued to hold their own with an increase in both sectors. The rate of decline in Civil engineering was the most notable and the CIPS cited a lack of new work in this sector.

Good news for new orders

Despite the slight slowdown there was good news for new construction orders. The growth in new orders in was at its highest since December 2016 and this was particularly notable for new building in the residential sector which continues to see a growth in demand.

Redrock Construction Outlook October 2018 - our view

What is behind the figures?

Analysts have long cited Brexit as having the potential to cast a shadow over the construction industry but the direct impact continues to be difficult to measure. However, there is continued uncertainty hanging over the UK economy as a whole whilst business waits for a solid plan/agreement to emerge.

The EU Summit which will be held in Austria on 18-19 October is intended to decide on the final terms of Brexit but it is not yet clear what, if anything, will be agreed.

This month’s construction output survey did reveal a decrease in optimism amongst construction firms as a result of an overall lack of confidence. This is increasingly leading to potential project delays and there is a feeling of ‘putting off projects until things are clearer’. General feedback on confidence about the future was found to be at its second lowest level since February 2013.

What does this mean for construction industry employment?

Interestingly and in contrast to the decrease in general optimism, as a result of the upturn in orders – employment was at its highest since the end of 2015. Firms also reported taking on more apprentices and trainees.

With an ongoing skills shortage in the industry and the potential for this to worsen over the medium term with less automatic access to European workers, this could be a positive sign that firms are beginning to increase investment in training to ensure a supply of skilled labour into the future.

Redrock Construction Outlook October 2018

Our view

Another month – another slight dip and the picture seems to be really up and down since we have been following the trends this year. The one thing that can be concluded is that general uncertainty continues to cast a shadow over confidence. Although new orders have picked up – any confidence about the future is muted and this continues to be the case whilst we are awaiting the outcome of Brexit negotiations and is likely to remain until there is a clear indication of the way forward.

At RedRock we continue to remain busy and to see a demand for professionals for all construction sectors and particularly those who are high skilled trades such as plumbing, engineering and electricians.

If you are looking for a new role in any of these areas – get in touch with us to find out what is on offer today.