Construction growth continues as cost rises cause concern

Published:  12 May, 2014

The construction sector has seen growth for the fourth consecutive quarter (Q1 2014) according to the latest Construction Trade Survey from the Construction Products Association (CPA) published today (12 May).

The results mark the first time in six years that the industry has enjoyed four consecutive quarters of growth. Firms across all areas of the construction sector reported increased output, including building contractors, SMEs, specialist contractors, civil engineers and product manufacturers.

Dr Noble Francis, economics director at the CPA, said: "Increases in orders and enquiries clearly indicate that activity will continue to rise throughout 2014. Unsurprisingly, private new housing was the key driver of construction activity. On balance, 57% of contractors stated that sector output rose in Q1 compared with a year ago, a considerable rise from the 20% balance reported in 2013 Q4. In addition, output in commercial offices and retail, the largest construction sector, rose for 22% of contractors, on balance, compared with a year earlier. This is a significant rise from the 8% balance reported just three months ago. Tender prices rose in Q1 but any boost from this is likely to occur when the resulting work hits the ground later this year."

The survey also highlighted concerns facing the private new housing sector, including rising costs and poor skills availability. Some 61% of building contractors said they found it difficult to source bricklayers during Q1, compared with 41% in Q4 of 2013 and only 10% this time last year. A further 28% reported that they had difficulty recruiting carpenters in Q1, slightly lower than the 32% reported in Q4 but a sharp rise from the 3% who reported the same difficulty in Q1 of 2013.

Paul Senior, national chair of the National Federation of Builders, said: "Higher labour costs and a lack of available skills are a ticking time bomb that needs to be defused urgently otherwise, for many SMEs, the premiums attached to the cost of simply building will become unsustainable."

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