Commenting on the survey, Dr Noble Francis, Economics Director at the Construction Products Association, said, “Construction firms reported growth once again in the third quarter of 2014, the sixth consecutive rise in activity for the first time in six and a half years. Activity rose in the third quarter according to 60% of contractors, on balance.
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“Private housing activity slowed in Q3 with 35% of firms, on balance, reporting that private housing output rose compared with 57% in Q1 and 41% in Q2. This slower growth in private housing, however, was offset by significant growth in other sectors. On balance, 43% of firms reported growth in private commercial, the largest construction sector, which covers offices and retail work. A further 41% of firms, on balance, reported work growing in the private industrial sector, which covers factories and warehouses construction.
“Construction firms also reported rises in forward looking indicators such as orders and enquiries, which clearly indicate that activity will rise throughout 2015. A rise in Q3 order books in private housing was reported by 15% of contractors, on balance. A further 13% and 12% of firms reported rises, on balance, in orders books across private industrial and public non-housing (education and health) respectively.
“The only dark clouds in construction were seen around margins, which continued to be hit hard. Construction firms had to suffer rises in costs in Q3 once again and although tender prices also rose in Q3, the benefits of these tender price rises are only likely to be felt when the work from these contracts occurs in 2015.”
Stephen Ratcliffe, Director UKCG, said, “These figures are encouraging, especially since growth is now apparent in all sectors of construction. They are in line with ONS data and paint a better picture than earlier this year. Labour cost rises do signal the need for the industry to attract new recruits and emphasise the importance of our campaign ‘Born to Build’, which is trying to entice young people to consider a career in construction.”
Richard Beresford, Chief Executive of the National Federation of Builders, added, “The industry is in recovery. The good news of across the board rises in reported output makes it tempting for us to take our eye off some of the industry’s structural issues. With more work around, we have a little breathing space, an opportunity to address access to finance, tender costs, skills and security of materials’ supply to ensure a more sustainable recovery.”
Key survey findings include:
- 60% of building contractors, on balance, reported that construction output rose in the third quarter of 2014 compared with a year ago
- Private housing output in Q3 rose according to 35% of building contractors, on balance
- 43% of building contractors, on balance, reported that private commercial output rose in the third quarter of 2014 compared with a year ago
- Private industrial output in Q3 rose according to 41% of building contractors, on balance
- 68% of firms reported labour costs rose and 74% of firms reported that materials costs rose in Q3 compared with the previous quarter
- 11% of building contractors, on balance, reported a fall in margins in Q3 compared with Q2
- 41% of building contractors reported difficulties recruiting bricklayers in Q3 compared with 47% in Q2
- 39% of building contractors reported difficulties recruiting carpenters in Q3 compared with 47% in Q2