Construction barometer shows signs of industry slow down

Published:  27 October, 2016

Sales expectations in the construction sector over the next six months are at their lowest level since 2011 as the market shows signs of slowing down, although newbuild housing and the London market remain relatively healthy, according to a report.

The October 2016 Construction Industry Barometer, completed by senior executives from across the construction supply chain, was published by construction market research specialists Leading Edge.

In terms of sales performance, the average sales increase over the last six months (April to September 2016) compared to a year earlier was 1.6%, the lowest figure since April 2013 – surveys in the interim period have reported back average sales increases of 5% plus. On the positive side, 38% of companies are still confident of a sales increase over the next six months and expect the current slowdown to be temporary.

Marketing budgets are set to grow this year in 50% of construction-related companies, down from 62% in the April survey, while 23% are expecting to increase their headcount – similar to the 26% in April.

The average forecast increase in marketing spend for the next 12 months is 0.8%, the same as in April but down from 2.0% in October 2015.

Mel Budd, director at Leading Edge, said: “The survey shows that half of companies are planning an increase in their marketing budgets with a much smaller number, at 17%, looking to reduce their marketing spend over the next year.

“Although the market may have been stalling anyway, Brexit certainly seems to have had an effect. The immediate impact has been increases in the prices of imported building materials due to the falling pound, which together with the labour shortage has put a squeeze on margins for contractors. The survey showed there is now a level of uncertainty in the market which has caused some building projects to be stalled or reviewed. However, a number of companies are still confident of improving sales and parts of the market remain robust. ”

To download Leading Edge’s Construction Industry Barometer report, visit the company’s website.

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