The Construction Products Association has released their latest construction forecasts, showing that construction output is expected to grow by 0.8% in 2017, 0.7% in 2018 and 2.2% in 2019. Whilst showing that construction will maintain its post-Referendum momentum, these forecasts are also masking considerable variation in fortunes across key construction sectors.
The ONS have released their Construction Output in Great Britain: December 2016 figures, showing that construction output rose by 1.8% compared to November 2016, with private commercial work being one of the main drivers behind construction growth.
The Markit/CIPS UK Construction PMI January report shows the weakest construction activity growth since September 2016. The Index registered 52.2 in January 2017, a decrease from 54.2 in December 2016, signalling the weakest expansion of growth for 5 months. Complementing this, the latest Economic & Construction Market Review from Barbour ABI, shows that the number of construction projects declined by 3.2% in 2016, from 11,857 to 11,478. This compares to a fall of 4.7% in 2015, and differs from the growth seen in both 2013 and 2014.
UK Construction PMI - January: 52.2
The Brexit effect on sterling’s exchange rate has caused issues for contractors and construction clients. The sharp fall in sterling has increased their costs on imported materials and components, forcing them to ensure that this impact is costed into future projects. Also Clients will now need to take greater risks on project decisions, whilst suppliers will need to do the same when it comes to pricing. This then creates the question of whether the adversarial tactics of previous downturns will make a comeback?
Source: Competitive Advantage Consultancy Ltd