Commentators might have been predicting the birth of the Royal baby would provide an economic boost to the country as well as lifting the feelgood factor, but the industry was full of signs this week that we are over the worst.
1. The latest GDP figures, published by the Office of National Statistics, showed that UK construction output increased by 0.9% in the second quarter of 2013 compared to the same quarter a year ago, as the UK economy grew by 0.6% overall.
Commenting on the figures, Noble Francis, economics director at the Construction Products Association, said: “The GDP figures released today show a second consecutive quarter of growth for the UK economy. Construction output was at its lowest in 12 years in the first quarter; however, information from within the industry suggests that the first estimate of 0.9% growth will be revised upwards in the ONS’s second and third estimates.”
Mike Smith, chairman of the Chartered Building Company Scheme, said: “Since the budget there has been an increase in order book values in all areas, both residential and commercial/public sector. Whether this has meant that there is a change in fortunes in the industry or just a ‘blip’ is uncertain and the true test will be if the surge continues into the winter months and beyond.”
2. The RICS construction market survey found that a net balance of 21% more surveyors reported rises in workloads during the second quarter of 2013, the most positive reading in over six years. It said 59% more surveyors predicted that workloads over the coming 12 months would continue to rise rather than fall. Construction activity saw the biggest rise in London, the south east and the midlands with Northern Ireland the poorest-performing region.
3. The National House Building Council’s new home registration statistics showed that the UK experienced the highest half-yearly total of new homes registered since 2008 with 67,422 new homes registered between January and the end of June 2013. The figures for Q2 2013 were up 38% compared to the same period last year, at 35,683.
The data appears to demonstrate the positive impact the first stage of the government’s £130bn mortgage guarantee scheme is having on the housing market.
4. The British Bankers’ Association said the hike in mortgage approvals reached a 17-month high in June with 37,278 loans worth £5.7bn approved.
5. Figures from Experian show the number of construction firms that fell into insolvency dropped to 213 last month from 278 in June 2012. The overall business insolvency rate in the UK also fell to 0.07% in June from 0.08% in June 2012.
Meanwhile, looking ahead, research from PricewaterhouseCoopers forecasts that over 17,000 new jobs could be created in construction by 2020 if the financial services sector is given the confidence to lend money to firms.
The report examines the likely outcome if financial services’ contribution to the wider economy was able to rise by £50bn between now and 2020 thanks to a GDP rise of 2-3% and “a robust, but supportive, regulatory regime and favourable economic and market conditions”.
This scenario would result in up to 218,000 jobs across all UK industries by 2020, 17,400 jobs in construction, nearly 50,000 jobs in manufacturing and almost 40,000 jobs in transport, said the report.
“There’s a big opportunity there which could have a major knock-on effect on construction employment,” said Chris Temple, construction leader at PwC. “GDP is a key driver for job creation and today’s figures from ONS are encouraging. We’re already starting to see an ease in financing in the house building space, which we expect to extend to contractors soon, which have a positive influence on job creation.”
