REVIEW: CONSTRUCTION
http://www.insider.co.uk March 2020 INSIDER 45HOPES ARE BUILDING
BUT UNCERTAINTY
STILL LOOMS
By FRANCIS SHENNANO
PTIMISM is running
ahead of recovery in the
construction sector. The
value of all UK construction
contracts last year was £59.9bn:
0.2 per cent up on 2018 but that was
15.7 per cent lower than 2017 and
20.3 per cent lower than the £75.1bn
peak in 2015.
The Economic & Construction
Market Review from industry
analysts Barbour ABI shows
residential was the leading sector,
accounting for 38.4 per cent of all
contracts, 0.3 per cent up on 2018,
followed by infrastructure at 17.3 per
cent, but 2.0 per cent down on 2018.
Optimism is at its highest level
since April 2018 but commercial
activity decreased for the 13th
consecutive month in January,
according to last month’s UK
Construction Total Activity Index,
produced by IHS Markit with the
Chartered Institute of Procurement
& Supply. The rate of fall, though,
was less than in December and the
slowest since the start of last year.
Increased housebuilding and
infrastructure spending will boostconstruction this year, according to
Scottish respondents in a survey by
the Royal Institution of Chartered
Surveyors (RICS). A net balance of
37 per cent of Scottish surveyors
expect more work in a year’s time,
with a net balance of 25 per cent
expecting an increase in private
housebuilding, one of the strongest
rates in the UK.However their expectations for
employment and profit margins are
lower than everywhere in the UK,
except Northern Ireland.
“Like the manufacturing sector,
construction is highly reliant on
economic certainty and, as we all
know, that was been in short supply
throughout 2019,” says Kate Kirby,
construction and infrastructure
partner at law firm DWF. “However,
the start to 2020 looks a little better.
“There was some sign ofimprovement, in that the slowdown
in the construction sector eased to
its slowest pace in eight months in
January but the fact that the two
largest contributions to the fall in
output came from civil engineering
and commercial construction is
troubling.”
She concludes that the sector is
not out of the woods yet. “Though
this rebound is a welcome sign,
the danger remains that the sector
could shrink again. The political
situation in the UK and its attempt to
navigate through trade deals this year
could see construction businesses
experiencing a see-saw of good and
bad news in the coming months.”
The UK Construction Total
Activity Index showed housebuilding
in January was the best performing
area and Kevin Reid, chief executive
of the Cruden Group, is hopeful
for this year. “Following last year’s
hangover of political uncertainty, the
prospects for the sector, particularly
in housebuilding, look encouraging
and we look forward to a period of
stability and increased consumer and
investor confidence.
“This year, the Cruden Group will
focus our efforts on expanding ourThe possibility of unlocking funds
delayed by recent political uncertainty
would be extremely welcome
Alastair Wallace, Thomas & Adamson (below)