Almost a third of specialist contractors plan to expand their business over the next three months as indications of a positive shift in momentum in the industry continue to grow.
In the latest state of trade survey by the National Specialist Contractors Council for the three months to July, 44 per cent of specialists reported an increase in orders, up from 27 per cent in Q1 2013, while 34 per cent said their orders were down.
NSCC chief executive Suzannah Nichol told Construction News these were “good signs”, but warned that the industry “should wait and see for a second and third quarter” before hailing a recovery.
It came after the latest Construction Products Association forecasts predicted that construction output will grow by just over 2 per cent in 2014, while the Office for National Statistics reported last month that construction grew 0.9 per cent in Q2 2013 compared with Q1 2013, marking just the second quarterly upturn in the sector since Q2 2011.
NSCC state of trade survey:
49% of specialist contractors had more enquiries in Q2 than Q1
31% of specialist contractors plan to expand in next three months
Ms Nichol added that contractors “have to look ahead, not just at the now” and encouraged them to review their business model now for the next 12 months to maintain positive cashflows and position themselves for growth.
Speaking at the site of contractor’s work on Heathrow’s Terminal 2B, Balfour Beatty Construction Services UK chief executive Nick Pollard hailed the UK economy as “stabilised and steadily coming back in terms of growth”, while Morgan Sindall chief executive John Morgan said the contractor is now moving away from cost-cutting and instead “preparing for growth”.
Analysts have warned, however, that more pain is expected as the industry returns to growth and material and building prices become unsustainable.
Construction Products Association economics director Noble Francis told Construction News the growth forecast “is not huge, but it is still growth and it is new-work driven”.
Dr Francis added that private housing was the primary driver for the upgrade to the forecasts, citing Help to Buy as a major factor, but said infrastructure and repair and maintenance work would also see uplift.
Construction Products Association forecast
5% private housing output growth in 2014
12% roads output growth in 2014
As work in the housing sector picked up, longer-term business planning would be critical. “Whereas during the downturn they were able to bring in bricks two to three days in advance… housebuilders need to get used to planning in advance again,” Dr Francis said.
Construction output is expected to fall by 1.5 per cent this year, but then grow by 2 per cent in 2014 and 4.5 per cent in 2015, when the industry is forecast to be worth more than £100bn for the first time since 2011.