The end of the financial year and the start of a new quarter is a good time to look back over the previous quarter’s performance, and garner some insights into what the year ahead may hold.
A Slow Start to 2018
Early 2018 saw the largest decline in the construction sector since March 2013, according to the latest figures from the Office for National Statistics (ONS). February saw a -0.8% decline in the previous three months to February, shrinking 3% compared to February 2017.
However, looking at the figures over time, the industry has plateaued, remaining fairly stable at high levels that have not been seen for many years. Both new and repair works have risen steadily, peaking in December 2017. The decline may well be the effects of a combination of many projects already in the pipeline, the extreme weather conditions in February shutting down sites, and the after-effects of the Carillion collapse influencing investors.
The value of all construction contracts awarded in March was 8.7% higher from February 2018, potentially indicating that the plateau is beginning to end – particularly with the start of a new financial year and new funding cycles beginning. Of those contracts awarded, 19% were in the South East, 16% were in the North West, and 15% were in London.
The largest type of projected awarded in March was residential, accounting for 49% of all contracts. In fact, residential projects represented 3 out of the top 5 biggest contracts, with a combined value of £329.7 million.
Despite the early ONS figures, nearly half of the RICS UK Construction and Infrastructure Market Survey for Q1 2018 survey respondents expected workloads to rise throughout 2018, with increases already being reported. The Midlands and the South West were showing significant acceleration, but rises were seen across all geographic regions.
This was supported by the Turner and Townsend UK Market Intelligence Report, which highlighted output surges in these same areas. The high demand and insufficient contractor supply in these areas has contributed to higher tender prices. This significant regional performance is thought to be linked to a higher degree of autonomy from devolution measures.
Looking forward, the stimulus measures for housebuilding and the advance of Brexit negotiations leading to a stronger pound are expected to help ease cost pressures and offset the relatively weak start to the year.
Professional Staff in Short Supply
The RICS Survey also indicated that labour shortages are still a concern, particularly in professional services such as quantity surveying. The shortage of quantity surveyors reported by survey respondents was at its highest level for 10 years.
This scarcity of staff combined with the rising workload means that there is likely to be increasing demand for quantity surveyors, risk managers, and other industry professionals. If you would like to be one of the first to hear about opportunities near you, register your CV with us for the latest updates.
Operations Director, UK
I am responsible for the delivery of Search Assignments, Business Development and UK Candidate Attraction Strategy. Based in Leicester and Melton Mowbray and have 20+ years experience in construction recruitment. I focus on recruiting for construction jobs in the East Midlands, West Midlands and across London and South East England.
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