Specialists struggle amid poor weather and Carillion collapse
Half of specialist contractors reported a fall in output in the first quarter of the year, as they struggled with the demise of Carillion and freezing weather.
That's according to the Construction Products Association (CPA), which has released details of its Construction Trade Survey for the last quarter.
Nonetheless, 23% of SMEs and 50% of specialist contractors reported an increase in Q1, on balance, providing some hope for the rest of the year.
The CPA found that although activity continued to increase for main contractors and SME builders, there was a smaller proportion of firms reporting a rise.
Meanwhile, civil engineering firms reported a second consecutive fall in workloads. Heavy side product manufacturers' sales - a leading indicator of structural and groundworks - also dropped for the first time in five years.
More promisingly, more than one quarter of firms surveyed expected orders, enquiries and product sales for the year ahead to remain positive, although contractors reported that orders were concentrated in the housing and infrastructure sectors, which together account for 35% of total construction output.
Rebecca Larkin, senior economist at the CPA, said: "The industry’s run of growth was halted by a quarter that combined the liquidation of Carillion and the snow disruption in February and March.
"Encouragingly, order books throughout the supply chain suggest activity will pick up again throughout the year.
"This appears to be driven by just two sectors, housing and infrastructure, which are reliant on a ‘steady state’ of government support.
"Private sector house building continues to benefit from Help to Buy, housing associations are commencing activity under affordable homes funding programmes and contract awards for major strategic infrastructure projects such as HS2 are lining up a pipeline of longer-term infrastructure activity."
Other key findings in the research include:
- On balance, 5% of main building contractors reported that construction output rose in the first quarter of 2018 compared with a year ago
- 1% of civil engineers, on balance, reported a decrease in workloads during Q1
- 8% of SME contractors reported increased workloads in Q1, on balance, as compared to three months earlier
- Main contractors reported lower order books in industrial, commercial and public non-housing
- 24% of civil engineering firms reported an increase in new orders in Q1, on balance
- 87% of main contractors, 90% of heavy side manufacturers and 84% of light side manufacturers reported raw materials costs rose in Q1 while overall costs increased for 84% of civil engineering contractors.