UK construction rises despite upcoming uncertainty

The UK construction industry recorded a twelfth consecutive quarter of growth in the first quarter of 2016, according to the latest report by the Construction Products Association.

Growth, as well as a rise in output, was reported by companies across the industry, including contractors, SME (small and medium-sized enterprises) builders and civil engineers.

Sales of construction products increased for 38% of heavy-side manufacturers in the first quarter, compared to 29% in the previous quarter. Workloads increased for 20% of civil engineers, compared to 5% in the previous quarter, as well for 13% of SME builders, compared to 6% previously.

Output increased for 38% of specialist contractors, representing a 7% rise for the fourth quarter of 2015.

However, forecasts for the coming quarter and year are not as bright, as uncertainty amounts amid the lead-up to the EU referendum in June.

Rebecca Larkin, senior economist at the CPA, said, “After a slowdown at the end of last year, firms throughout the construction industry experienced a stronger opening quarter in 2016.

“In spite of this, the clear theme for the second quarter is uncertainty, with main contractors reporting lower orders in all sectors as projects are paused or postponed ahead of the EU referendum in June.”

She added, “Beyond that, firms continued to indicate that a shortage of skilled workers is the largest threat to construction activity over the rest of the year.”

She said that main contractors reported difficulties in recruiting bricklayers, carpenters and plasterers in the first quarter, while low availability of labour was also reflected in upward pressure on wage bills among product manufacturers and civil engineers.

Meanwhile, Richard Beresford, CEO of the National Federation of Builders, said, “Uncertainty over the outcome of the EU referendum and over the nation’s defining issue – housing – is reflected in slowing industry performance.

“While homes will continue to be built, as long as there is uncertainty over government policy, we will not be able to provide anywhere near the number of homes people need.”