Tuesday, 13 November 2018

Cost pressures cast a shadow over Construction growth says CPA

The construction industry experienced modest growth in the third quarter of 2018, following a weather-related boost to activity in Q2, according to a quarterly survey of product manufacturers, contractors, civil engineers and SME builders by the Construction Products Association       

The Construction Products Association’s Construction Trade Survey for 2018 Q3 shows that during the quarter, 27% of product manufacturers, 25% of main contractors, 16% of SME builders and 10% of civil engineering firms reported an increase in activity. Output was reported lower for one-third of specialist contractors, however. The new orders and enquiries logged in Q3 indicate that the drivers of growth in the next 12 months will be restricted to private housing, repair and maintenance, and infrastructure, whilst further rises in costs have been reducing profit margins for main contractors and specialist contractors since the beginning of 2017. On balance, 80% of main contractors reported a rise in materials and labour costs, 90% of product manufacturers reported an increase in fuel costs and cost rises for civil engineering contractors reached a three-year high.

Commenting on the survey, Rebecca Larkin, Senior Economist at the CPA, said: “The industry looks to have maintained some of the momentum from its catch-up in the second quarter. However, beneath the top-level growth rate, firms throughout the supply chain are grappling with a narrowing base of activity led by private housing and infrastructure work and rising costs for labour, raw materials and fuel. This triple threat for input costs is placing a clear strain on contractors’ profit margins, worsening confidence in an already-heightened environment of risk aversion.”

Richard Beresford, chief executive of the National Federation of Builders (NFB), said: “The latest trade survey indicates a general increase in construction output, workloads and enquiries for SME contractors throughout the third quarter of 2018. This trend reflects the effect of the unseasonably warm weather in lifting up overall industry performance. The fall in profit margin for 7% of main contractors and 33% of specialist contractors is rather worrying because it is less than one year since the collapse of Carillion. With the economy facing further uncertainty in future months with the UK’s departure from the EU in March 2019, contractors operating with falling profit margins are a reason for concern.”

Commenting, CECA Director of External Affairs Marie-Claude Hemming said: “We welcome the fact that the infrastructure sector has enjoyed a second quarter in a row of growth, but there are some concerns as to poor growth in future orders. Given the substantial pipeline of work that exists, we would expect that order books would be rising at a greater rate that they have done in the last six months. It may be that clients are wary of investing given the uncertainty surrounding the effects on the economy of the UK leaving the European Union in 2019, and the inability of businesses to plan adequately for the future, given the failure of Brexit negotiations to progress beyond their current impasse.”

Key survey findings include:

  • On balance, 25% of main building contractors reported that construction output rose in the third quarter of 2018 compared with a year ago
  • 10% of civil engineers, on balance, reported an increase in workloads during Q3
  • On balance, 16% of SME contractors reported increased workloads in Q3 compared to three months earlier
  • Main contractors reported that order books were higher in private new housing, and the housing and non-housing R&M sectors
  • 15% of civil engineering firms reported an increase in new orders in Q3, on balance, but new orders fell for 17% of specialist contractors
  • 22% of SMEs reported an increase in enquiries in Q3, on balance
  • Overall costs increased for 89% of civil engineering contractors, whilst 80% of main contractors reported a rise in costs for labour and materials. Fuel costs rose for 90% of heavy side and light side product manufacturers
  • Profit margins fell for 7% of main contractors and one-third of specialist contractors in Q3.

Monday, 5 November 2018

Civil engineering drives construction growth in October

UK construction growth increased during October, driven by a rebound in civil engineering activity.

Having declined in both August and September, civil engineering activity grew at the strongest pace since July 2017. Housing and commercial construction also expanded, but at weaker rates.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index rose to 53.2 in October, the second highest level in 16 months. This was up on 52.1 in September and against the no-change reading of 50. A figure below 50 indicates contraction.

However, there was a slower rise in new business volumes, with firms mentioning intense market competition and delayed final decisions from clients. Business expectations fell to almost a six-year low.

Consequently, input purchasing increased more cautiously, at the slowest rate in seven months. Despite this, delivery times for construction products and materials continued to lengthen and firms continued to report stock shortages at vendors.

Cost pressures remained strong, despite the rate in input price inflation falling to a 27-month low, with companies highlighting increased costs for fuel, labour, timber and steel.

Duncan Brock, group director at CIPS, said: “These results point to the sector getting stuck in the mud as we approach March 2019, and with ongoing supplier delays and stock shortages, the sector may not be able to respond quickly enough anyway should there by a sudden upturn in fortunes.”

Trevor Balchin, economics director at IHS Markit, said: “Construction firms continued to raise headcounts at a strong pace, suggesting they are not expecting an imminent contraction in demand. That said, if the new orders and expectations indices remain at current levels or fall further, the employment index could also drift back towards the 50 no-change mark.”

Photo: From Shutterstock

Thursday, 1 November 2018

November Job in Focus: General Manager for Bathroom Products in West Midlands - £60k

Our Job in Focus for November is General Manager's position for High-end Bathroom Products. Based in the West Midlands.

You will be handed full responsibility for managing the staff, managing the budget, purchasing and sales as well as all things operations. You will be tasked with driving growth, increasing profitability, health and safety responsibility, implementing process procedures. You will work closely with other departments such as HR as well as Marketing and Sales. £60k + benefits

Our Construction & Building Industry Job in Focus feature takes a detailed look at some of the fantastic sales & marketing construction and building materials job vacancies currently on our books. 

Job in Focus is also promoted on our website. www.pinnacleconsulting.co.uk 


Job Title: General Manager
Job Ref: J11134
Product: Bathroom Products
Location: West Midlands
Salary: £60k

General Manager for Manufacturer of high quality bathroom products. 

Package: £50,000 - £60,000 phone, laptop, pension and 20 days holiday plus bank holidays and Christmas shut down. 

Role: General Manager - You will be handed full responsibility for managing the staff, managing the budget, purchasing and sales as well as all things operations. You will be tasked with driving growth, increasing profitability, health and safety responsibility, implementing process procedures. You will work closely with other departments such as HR as well as Marketing and Sales to maximise the exposure for our client's high-end bathroom products 

Location: West Midlands based candidates could live in Shropshire, West Midlands, Warwickshire, Staffordshire, or Worcestershire 

Candidate: We are looking for candidates who have experience managing a large manufacturing business at either general manager level or operations manager level. Candidates with experience in the bathroom market would be at an advantage but this is not essential. 

To find out more about this opportunity contact James on 01480 405225 or apply online.