Friday, 20 November 2015

UK Construction Market Update - October

The ONS have released their Output in the Construction Industry September and Q3 2015 figures, showing that in Q3 2015, output was estimated to have decreased by 2.2% compared with Q2 2015 and between Q3 2015 and Q3 2014 estimated output decreased by 0.1%.

In September 2015 estimated construction output decreased by 0.2% compared with August 2015 due to a fall in all new work of 2.4%, offset by an increase in repair and maintenance of 3.8%

The Markit/CIPS UK Construction PMI registered 58.8 in October, down from 59.9 in September. This is still well above the neutral value of 50.0, marking two-and-a-half years of sustained output growth across UK construction, helped, in contrast to ONS figures, by the fastest rise in new work for 12 months. However, the pace of growth remains weaker than seen on average in 2014, but the latest result is still above the pre-election low of 54.2 seen in April 2015.

UK Construction PMI - October: 58.8
Commenting on the latest ONS figures, the Construction Products Association say that although construction output has fallen in Q3 2015, medium term prospects still remain bright, this fall in output is the first annual fall since Q1 2013, and skill shortages have been a key issue recently hindering construction growth.

Global Construction Perspectives have published their report Global Construction 2030. The report predicts that the UK construction market will become the world’s 6th largest by 2030, but to do so $6.2 trillion needs to be spent on UK construction over the next 15 years. Worldwide output is predicted to increase by 85% into 2030, driven by growth in China, India and the US.

Reinforcing the often stated view that London construction is separate from the remainder of the UK, Deloitte have published a report Supporting Development, Enabling Growth which shows that in 2013 there were 11 central London boroughs which contributed 7% of total UK construction.

Savills have released their latest Total Commercial Activity Index. The research shows that on balance 12% of commercial developers reported growth in September 2015 compared to August 2015, which points towards commercial activity growth picking up.

The Key Note Market Report which evaluates the housebuilding industry in the UK over a 5-year review period between 2010 and 2014 has been released. Total value of new housing output in Great Britain grew by 30.4% in the review period showing that recovery in UK housebuilding is now underway.

The Nationwide House Price Index reports that in October 2015 house prices increased by 0.6%, with annual house price growth increasing to 3.9% in October 2015 up from 3.8% in September 2015. The Halifax House Price Index reports that in October 2015 house prices increased by 1.1%, and house prices in the last 3 months (August – October) were 2.8% higher than the preceding 3 months.

With the government’s spending review this month, the chancellor has committed £100 billion in infrastructure spending by 2020, which includes launching the National Infrastructure Commission and full funding for the £15 billion Roads Investment Strategy. The review is also to include nine new prisons across England and Wales to replace outdated Victorian jails, which will be sold off to free up space for around 3,000 homes and raise funds to pay for the building programme.

Source: Competitive Advantage Consultancy Ltd