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Watts Bulletin (issue 146)

Welcome to the May issue of the Watts Bulletin, our regular roundup of all the latest news and views from around the construction sector. After years of stagnation, the industry is now seeing a consistent month-on-month increase in activity, as confirmed by the latest figures from the Construction Products Association which show four consecutive quarters of increased activity. However, following on from sustained, improving output figures as surely as night follows day, there are now indications of skills shortages and higher labour costs. As Paul Senior, National Chair of the National Federation of Builders, said earlier this month:  “Rising workloads and increases in future orders are good news, but behind those figures are areas of concern.  Higher labour costs and a lack of available skills are a ticking time bomb that needs to be defused urgently…” See full story below for more from the CPA survey.

Also in this issue we report on the apparent failure of the government’s ‘High Street First’ policy; success for the Home and Communities Agency (HCA) in beating its land disposal targets; and new guidance on taking claims to the Technology and Construction Court.

Watts Bulletin (issue 146)

Construction output at six-year high, CPA survey reveals

The latest Construction Trade Survey published earlier this month by the Construction Products Association, reveals a rosier picture of construction industry growth than the industry has seen for six years.

Sustainability

The survey shows that the industry has enjoyed four consecutive quarters of increased activity, with firms from all sectors of the industry reporting increased output.

Private new housing is the key driver that is improving the fortunes of the industry, with 57% of contractors reporting sector output rising in Q1. This is a considerable improvement on the 20% reporting an increase in Q4 2013.  In addition, output in commercial offices and retail, the largest construction sector, rose for 22% of contractors, -a significant increase from the 8% reporting a rise just three months ago.

According to Dr Noble Francis, Economics Director at the Construction Products Association, “…increases in orders and enquiries clearly indicate that activity will continue to rise throughout 2014. Tender prices rose in Q1 but any boost from this is likely to occur when the resulting work hits the ground later this year, he continued.

“Currently, the key concerns are rising costs and skills availability in specific sectors such as private new housing.  Overall, the industry reported that there weren’t serious problems recruiting construction trades.  However, 61% of building contractors reported that it was difficult to obtain bricklayers during Q1 compared with 41% in Q4 and only 10% one year ago.  A further 28% reported that they had difficulty recruiting carpenters in Q1, slightly lower than the 32% in Q4 but contrasting sharply with only 3% experiencing difficulties recruiting carpenters in just one year ago.”

Other key findings from the quarterly survey include:

  • 47% of firms reported tender prices rose in 2014 Q1 versus only 2% in 2013 Q4;
  • 77% of building contractors reported that costs rose in 2014 Q1 compared with 63% in 2013 Q4;
  • 89% of firms reported rises in material costs in Q1, considerably higher than the 65% of firms reporting material cost rises in Q4;
  • 50% of firms reported rises in labour costs, higher than the 34% of firms reporting labour cost rises in Q1 and 7% at the start of the 2013;

No specialist contractors reported only receiving payment after more than 90 days and 14% of specialists reported being paid within 30 days.

For more information and to download the full survey, go to: www.constructionproducts.org.uk

How do you feel about these positive findings? Get in touch with your views on Watts’ Twitter page @Watts_Group or become a member of the Watts Bulletin group on LinkedIn.

Watts Pocket Handbook

The Watts Bulletin is the technical companion to the Watts Pocket Handbook, the essential guide to property and construction, as used by professionals since 1983.

Watts Bulletin editor: Trevor Rushton.

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